Forward Price To Earnings - Forward P/E


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".


Loading the player...

BREAKING DOWN '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.

  1. Price-Earnings Ratio - P/E Ratio

    The Price-to-Earnings Ratio or P/E ratio is a ratio for valuing ...
  2. P/E 10 Ratio

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

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

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

    An analyst's estimate for a company's future quarterly or annual ...
  6. Earnings

    The amount of profit that a company produces during a specific ...
Related Articles
  1. Stock Analysis

    5 Tech Stocks That Should Be on Your Radar

    Get an overview of the current state of the technology sector, and learn about strong tech stocks that investors should consider adding to their portfolios.
  2. 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.
  3. 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.
  4. 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.
  5. Economics

    Earnings Guidance: Can It Accurately Predict The Future?

    Explore the controversies surrounding companies commenting on their forward-looking expectations.
  6. 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.
  7. 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.
  8. Economics

    Calculating Days Working Capital

    A company’s days working capital ratio shows how many days it takes to convert working capital into revenue.
  9. Term

    What Is Financial Performance?

    Financial performance measures a firm’s ability to generate profits through the use of its assets.
  10. Economics

    5 Ways to Create Residual Income

    Here are 5 ways through which you can create residual streams of income.
  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 >>

You May Also Like

Hot Definitions
  1. Gross Profit

    A company's total revenue (equivalent to total sales) minus the cost of goods sold. Gross profit is the profit a company ...
  2. Revenue

    The amount of money that a company actually receives during a specific period, including discounts and deductions for returned ...
  3. Normal Profit

    An economic condition occurring when the difference between a firm’s total revenue and total cost is equal to zero.
  4. Operating Cost

    Expenses associated with the maintenance and administration of a business on a day-to-day basis.
  5. Cost Of Funds

    The interest rate paid by financial institutions for the funds that they deploy in their business. The cost of funds is one ...
  6. Cost Accounting

    A type of accounting process that aims to capture a company's costs of production by assessing the input costs of each step ...
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!