Forward Price To Earnings - Forward P/E

AAA

DEFINITION of 'Forward Price To Earnings - Forward P/E'

A measure of the price-to-earnings ratio (P/E) using forecasted earnings for the P/E calculation. While the earnings used are just an estimate and are not as reliable as current earnings data, there is still benefit in estimated P/E analysis. The forecasted earnings used in the formula can either be for the next 12 months or for the next full-year fiscal period.

 

Forward Price To Earnings (Forward P/E)

Also referred to as "estimated price to earnings".

INVESTOPEDIA EXPLAINS 'Forward Price To Earnings - Forward P/E'

The estimated P/E of a company is often used to compare current earnings to estimated future earnings. If earnings are expected to grow in the future, the estimated P/E will be lower than the current P/E. This measure is also used to compare one company to another with a forward-looking focus.

VIDEO

Loading the player...
RELATED TERMS
  1. P/E 10 Ratio

    A valuation measure, generally applied to broad equity indices, ...
  2. P/E 30 Ratio

    The price-to-earnings (P/E) ratio is the valuation ratio of a ...
  3. Franchise Factor

    The measurement of the impact on a company's price-earnings (P/E) ...
  4. Earnings Estimate

    An analyst's estimate for a company's future quarterly or annual ...
  5. Price-Earnings Ratio - P/E Ratio

    A valuation ratio of a company's current share price compared ...
  6. Earnings

    The amount of profit that a company produces during a specific ...
RELATED FAQS
  1. How do companies benefit from price discrimination?

    Insurance companies could be an attractive addition to an investment portfolio offering a good balance of capital appreciation ... Read Full Answer >>
  2. What is the difference between Macaulay duration and modified duration?

    The forward price to earnings (P/E) is the measure of a company's P/E ratio using its expected earnings. You could calculate ... Read Full Answer >>
  3. How can I calculate the forward p/e of the S&P 500?

    Forward price-to-earnings, or P/E, for the S&P 500 is calculated by dividing the market share per price by the forecasted ... Read Full Answer >>
  4. What is an alternative ratio to forward p/e?

    A metric that is an alternative to the forward price to earnings (P/E) ratio is the standard, or trailing, P/E ratio. This ... Read Full Answer >>
  5. What does the forward p/e indicate about a company?

    The price to earnings (P/E) ratio compares the share price of a company to the earnings it generates per share. The formula ... Read Full Answer >>
  6. What is the difference between forward p/e and trailing p/e?

    The forward P/E calculates the price-to-earnings ratio that uses projected future earnings. The trailing P/E, which is the ... Read Full Answer >>
Related Articles
  1. Economics

    Explaining Forward Price-to-Earnings Ratio

    The estimated P/E of a company is often used to compare current earnings to estimated future earnings.
  2. Markets

    The 5 Types Of Earnings Per Share

    A look at the five varieties of EPS and what each represents can help an investor determine whether a company is a good value, or not.
  3. Fundamental Analysis

    Can Investors Trust The P/E Ratio?

    The P/E ratio is one of the most popular stock market ratios, but it has some serious flaws that investors should know about.
  4. Economics

    Earnings Guidance: Can It Accurately Predict The Future?

    Explore the controversies surrounding companies commenting on their forward-looking expectations.
  5. Investing Basics

    How To Find P/E And PEG Ratios

    If these numbers have you in the dark, these easy calculations should help light the way.
  6. Markets

    How To Evaluate The Quality Of EPS

    Companies can manipulate their numbers, so you need to learn how to determine the accuracy of EPS.
  7. Economics

    Calculating Net Realizable Value

    An asset’s net realizable value is the amount a company should expect to receive once it sells or disposes of that asset, minus costs from its disposal.
  8. Investing Basics

    Calculating Unlevered Free Cash Flow

    Unlevered free cash flow (UFCF) is the free cash flow of a business before interest payments.
  9. Economics

    What are Capital Goods?

    Capital goods are assets with a useful life of more than one year that are used for the production of income.
  10. Economics

    Understanding Capital Assets

    A capital asset is one that a company plans on owning for more than one year, and uses in the production of revenue.

You May Also Like

Hot Definitions
  1. Multicurrency Note Facility

    A credit facility that finances short- to medium-term Euro notes. Multicurrency note facilities are denominated in many currencies. ...
  2. National Currency

    The currency or legal tender issued by a nation's central bank or monetary authority. The national currency of a nation is ...
  3. Treasury Yield

    The return on investment, expressed as a percentage, on the debt obligations of the U.S. government. Treasuries are considered ...
  4. Bund

    A bond issued by Germany's federal government, or the German word for "bond." Bunds are the German equivalent of U.S. Treasury ...
  5. European Central Bank - ECB

    The central bank responsible for the monetary system of the European Union (EU) and the euro currency. The bank was formed ...
  6. Quantitative Easing

    An unconventional monetary policy in which a central bank purchases private sector financial assets in order to lower interest ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!