Trailing Price-To-Earnings - Trailing P/E

AAA

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)

INVESTOPEDIA EXPLAINS '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.

RELATED TERMS
  1. Earnings Per Share - EPS

    The portion of a company's profit allocated to each outstanding ...
  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. Price-Earnings Ratio - P/E Ratio

    A valuation ratio of a company's current share price compared ...
  6. Forward Price To Earnings - Forward ...

    A measure of the price-to-earnings ratio (P/E) using forecasted ...
Related Articles
  1. The 5 Types Of Earnings Per Share
    Markets

    The 5 Types Of Earnings Per Share

  2. Can Investors Trust The P/E Ratio?
    Fundamental Analysis

    Can Investors Trust The P/E Ratio?

  3. How To Find P/E And PEG Ratios
    Investing Basics

    How To Find P/E And PEG Ratios

  4. Understanding The P/E Ratio
    Markets

    Understanding The P/E Ratio

comments powered by Disqus
Hot Definitions
  1. Odious Debt

    Money borrowed by one country from another country and then misappropriated by national rulers. A nation's debt becomes odious ...
  2. Takeover

    A corporate action where an acquiring company makes a bid for an acquiree. If the target company is publicly traded, the ...
  3. Harvest Strategy

    A strategy in which investment in a particular line of business is reduced or eliminated because the revenue brought in by ...
  4. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  5. Pareto Principle

    A principle, named after economist Vilfredo Pareto, that specifies an unequal relationship between inputs and outputs. The ...
  6. Pareto Principle

    A principle, named after economist Vilfredo Pareto, that specifies an unequal relationship between inputs and outputs. The ...
Trading Center