Trailing Price-To-Earnings - Trailing P/E

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

The sum of a company's price-to-earnings, calculated by taking the current stock price and dividing it by the trailing earnings per share for the past 12 months. This measure differs from forward P/E, which uses earnings estimates for the next four quarters.

The trailing P/E ratio is calculated as follows:

Trailing Price-To-Earnings (Trailing P/E)

BREAKING DOWN 'Trailing Price-To-Earnings - Trailing P/E'

This is the most commonly used P/E measure because it is based on actual earnings and, therefore, is the most accurate. However, stock prices are constantly moving while earnings remain fixed. As a result, forward P/E can sometimes be more relevant to investors when evaluating a company.

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