What is 'Trailing PriceToEarnings  Trailing P/E'
Trailing pricetoearnings (P/E) is calculated by taking the current stock price and dividing it by the trailing earnings per share (EPS) for the past 12 months. This measure differs from forward P/E, which uses earnings estimates for the next four quarters. As a result, forward P/E can sometimes be more relevant to investors when evaluating a company.
BREAKING DOWN 'Trailing PriceToEarnings  Trailing P/E'
The P/E ratio is calculated by dividing a company's stock price by its earnings from the most recent fiscal year. The earnings for the most recent fiscal year can be found in the annual report on the income statement. At the bottom of the income statement is a total EPS for the firm's entire fiscal year. Divide the current price by this number for the traditional P/E ratio. For example, a company with a stock price of $50 and EPS of $2 has a P/E ratio of 25x, read 25 times. This means that the company's stock is trading at 25x its EPS.
Why Do Analysts Use P/E
Analysts like the P/E ratio because it places a relative price tag on earnings. This relative price tag can be used to look for bargains or to determine when a stock is too expensive. Some companies deserve a higher price tag because they've been around longer and have deeper economic moats, but some companies are simply overpriced. Likewise, some firms deserve a lower price tag because they have an unproven track record, while others are underpriced, representing a great bargain. Trailing P/E helps analysts match time periods for a more accurate and uptodate measure of relative value.
Trailing PriceToEarnings
A disadvantage of the P/E ratio is that stock prices are constantly moving, while earnings remain fixed. Analysts attempt to deal with this issue by using the trailing P/E ratio, which uses earnings from the most recent four quarters rather than earnings from the end of the last fiscal year.
Using the same example, if the company's stock price falls to $40 midway through the year, the new P/E ratio is 20x, which means the stock's price is now trading at only 20x its earnings. Earnings have not changed, but the stock's price dropped. Earnings for the last two quarters may have also dropped. In this case, analysts can substitute the first two quarters of the fiscal year calculation with the most recent two quarters for a trailing P/E ratio. If earnings in the first half of the year, represented by the most recent two quarters, are trending lower, the P/E ratio will be higher than 20x. This tells analysts that the stock may actually be overvalued at the current price given its declining level of earnings.

Forward Price To Earnings  Forward ...
A measure of the pricetoearnings ratio (P/E) using forecasted ... 
PriceEarnings Ratio  P/E Ratio
The PricetoEarnings Ratio or P/E ratio is a ratio for valuing ... 
P/E 30 Ratio
The pricetoearnings (P/E) ratio is the valuation ratio of a ... 
P/E 10 Ratio
A valuation measure, generally applied to broad equity indices, ... 
Overvalued
A stock with a current price that is not justified by its earnings ... 
Multiple
A term that measures some aspect of a company's financial wellbeing, ...

Investing
Differences Between Forward P/E And Trailing P/E
The most common types of price to earnings ratios are forward P/E and trailing P/E. Find out how they differ and the advantages and drawbacks of each. 
Investing
Beware False Signals From The P/E Ratio
The P/E ratio is a simple tool for evaluating a company, but no one ratio can tell the whole story. 
Investing
Is Stock With a Lower P/E Always A Better Choice?
Is a stock with a lower P/E always a better investment than a stock with a higher one? The short answer is no, but it depends on a few things. 
Investing
Comparing the P/E, EPS And Earnings Yield
Here are three ratios that help investors value stock returns. 
Investing
Explaining Forward PricetoEarnings Ratio
The estimated P/E of a company is often used to compare current earnings to estimated future earnings. 
Markets
How Do I Calculate the PriceEarnings Ratio?
If Apple is trading at $108.73 per share, and its trailing twelve months' EPS is $6.45, calculate the P/E ratio as... 
Trading
How To Use The P/E Ratio And PEG To Tell A Stock's Future
While the pricetoearnings ratio is commonly used for assessing stock prices, the price/earningstogrowth ratio offers forecasting advantages that investors need to know. 
Markets
Stocks With Bubbles That Could Burst in 2016
These are some of the overvalued stocks based on P/E and Forward P/E ratios. Will the bubbles burst in 2016? 
Investing
How To Find P/E And PEG Ratios
If these numbers have you in the dark, these easy calculations should help light the way. 
Investing
What Lies Ahead for Apple's P/E ratio
Recently, Apple's P/E multiple has come down to levels equal to the S&P 500. What does the future hold for the tech giant's P/E ratio?

What is the difference between forward p/e and trailing p/e?
Understand the difference between the trailing P/E ratio, which is the standard pricetoearnings calculation, and the forward ... Read Answer >> 
What is an alternative ratio to forward p/e?
Discover the most commonly used alternative equity evaluation ratio to the forward P/E ratio, and the relative advantages ... Read Answer >> 
How can the pricetoearnings (P/E) ratio mislead investors?
A low P/E ratio doesn't automatically mean a stock is undervalued, just like a high P/E ratio doesn't necessarily mean it ... Read Answer >> 
What does the forward p/e indicate about a company?
Explore the forward price to earnings ratio and learn its significance and how it compares to the traditional price to earnings ... Read Answer >> 
How do I calculate the P/E ratio of a company?
Find out how to calculate this common valuation ratio and what the results can tell you about a company's performance. Read Answer >> 
Stocks with high P/E ratios can be overpriced. Is a stock with a lower P/E always ...
The short answer? No. The long answer? It depends.The pricetoearnings ratio (P/E ratio) is calculated as a stock's current ... Read Answer >>