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Forward PE

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Forward PE means forward price-to-earnings ratio. Forward PE is also called estimated PE. Forward PE divides a stock's current price by its estimated future earnings per share. Forward PEs are calculated using consensus earnings estimates for the next four quarters. A forward PE evaluates the current stock price against what is expected to happen to earnings in the near future. If the forward PE shows earnings estimates are higher for next year, a stock whose current price seems high relative to last year's earnings may seem more reasonably priced. Forward PE is often used to compare a company's current earnings to its estimated future earnings. Forward PE will be lower than current PE if earnings are expected to grow in the future. Forward PE will be higher than current PE if earnings are expected to slow in the future.

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