Valuation Terms
Forward P/E
A P/E ratio based on expected future earnings rather than past earnings.
Also called: forward price to earnings
What it means
Forward P/E uses analysts’ or management’s expected future earnings, usually for the next 12 months, instead of trailing earnings. Because it relies on forecasts, it is more assumption-heavy than trailing P/E.
Why it matters
It shows how expensive the stock may look relative to expected profit, not just past profit.