Also called Price to earnings

Trailing P/E

What the market pays today for each dollar the company earned last year.

Updated 2026-09-03

How it is calculated

Trailing P/E = price ÷ last-12-months EPS

The trailing price-to-earnings ratio is the share price divided by the last twelve months of earnings per share. It answers one question: how many years of current profit are you paying for.

trailing P/E = price ÷ trailing EPS

A P/E of 25 means the price is 25 times last year's profit per share. Its reciprocal is the earnings yield.

It is the most quoted number in investing and the most misused. A low P/E is not cheap and a high P/E is not expensive. A company shrinking at 10 percent a year deserves a low multiple; a company compounding at 20 percent deserves a high one. The multiple only tells you what is being paid, never whether it is worth paying.

In Angie the P/E is displayed, never used. It is a cross-check sitting beside the DCF answer so you can see when the two disagree. Letting a peer multiple feed the valuation would make it a relative model wearing an absolute model's clothes.

See also

  • Forward P/E — The same ratio against next year's expected earnings, so it depends on a forecast rather than a fact.
  • EPS — Profit for the last twelve months divided by the share count. Accounting profit, not cash, which is why Angie values the cash instead.
  • Earnings yield — Earnings for every dollar invested, which makes a stock directly comparable to a bond yield. A company losing money has none.

← See this one in the deck

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.

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