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Forward P/E

Forward P/E Definition

Forward P/E or forward price-to-earnings ratio is a measure that divides a stock's current price by its forecasted earnings per share. The estimated future earnings used in the formula can either be earnings for the next 12 months or for the next full fiscal year.


Additional meaning of Forward P/E:

A forward P/E evaluates the current stock price against expected earnings in the near future. If earnings are expected to grow, the estimated P/E will be lower than the current P/E, the stock will seem more reasonably priced. This rate can also be used to compare one company to another with a forward-looking focus.


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