Also called price to earnings
Trailing P/E
What the market pays today for each dollar the company earned last year.
How it is calculated
Trailing P/E = price ÷ last-12-months EPS
A fuller explanation of this one is still being written. The definition above is the short answer.
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.
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.
