Forward Price to Earnings Ratio

Instead of net income, the Forward P/E uses estimated net earnings over next 12 months. Estimates are typically derived as the mean of a select group of analysts (note: selection criteria is rarely cited). In times of rapid economic dislocation, such estimates become less relevant as the situation changes (e.g. new economic data is published, and/or the basis of forecasts becomes obsolete) more quickly than analysts adjust their forecasts.

Example: Google’s Forward P/E is 13.00

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