Trailing Price-To-Earnings - Trailing P/E

What is 'Trailing Price-To-Earnings - Trailing P/E'

Trailing price-to-earnings (Trailing P/E) is 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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RELATED FAQS
  1. 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 price-to-earnings calculation, and the forward ... Read Answer >>
  2. 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 >>
  3. How can the price-to-earnings (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 >>
  4. 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 >>
  5. What is the average price-to-earnings ratio in the chemicals sector?

    Learn about the average price-to-earnings ratio among chemical companies, which industries house large chemical companies ... Read Answer >>
  6. What's the difference between absolute P/E ratio and relative P/E ratio?

    The simple answer to this question is that absolute P/E, which is the most quoted of the two ratios, is the price of a stock ... Read Answer >>
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