Forward P/E

The share price divided by the profit per share analysts expect over the next 12 months. It shows how many years of expected profit investors are paying for.

Example: a stock at $100 with expected earnings of $5 per share over the next year trades at 20 times forward earnings. A high forward P/E means investors expect strong growth.

Also called: forward price-to-earnings, forward price-to-earnings ratio, forward P/E ratio, price-to-earnings on next 12 months' earnings, times next year's expected profit, times next year's expected profits, times forward earnings, forward earnings multiple.

Related terms

  • Valuation: How expensive a stock is compared with what the company earns or might earn. A common measure is the price-to-earnings (P/E) ratio: the share price divided by yearly earnings per share.
  • Earnings per share: A company's profit divided by its number of shares. It's the most common way to measure profit, and the number Wall Street compares with its forecasts each quarter.
  • Price target: The price an analyst thinks a stock will reach, usually within 12 months. It's an opinion, not a promise, and analysts often disagree.

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