Term of the Day
Hey guys, reading Ail and Trainwreck's convo I wanted to help you all understand what forward P/E was. Details below, definition taken from investopedia.
P/E (Price over Earnings) Ratio:
P/E is a valuation ratio of a company's current share price compared to its per-share earnings.
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Calculated as: Market Value per Share / Earnings per Share (EPS) For example If a company is currently trading at $43 a share and earnings over the last 12 months were $1.95 per share, the P/E ratio for the stock would be 22.05 ($43/$1.95). |
EPS is usually from the last four quarters (trailing P/E), but sometimes it can be taken from the estimates of earnings expected in the next four quarters (projected or forward P/E). A third variation uses the sum of the last two actual quarters and the estimates of the next two quarters.
(Also sometimes known as "price multiple" or "earnings multiple".)
