Forward Price To Earnings - Forward P/E

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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.

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