Angie · learn
Forward P/E
The same ratio against next year's expected earnings, so it depends on a forecast rather than a fact.
How it is calculated
Forward P/E = price ÷ expected next-year EPS
A fuller explanation of this one is still being written. The definition above is the short answer.
See also
- Trailing P/E — What the market pays today for each dollar the company earned last year.
- PEG — A P/E adjusted for how fast the company is growing. Around 1.0 is conventionally treated as fair, though the convention has little theory behind it.
- EPS — Profit for the last twelve months divided by the share count. Accounting profit, not cash, which is why Angie values the cash instead.
Educational content, not investment advice. Angie explains how a valuation is built so you can judge it yourself. What you do with that is your call.
