Valuation

Forward Price-to-Earnings Ratio

Fwd P/E

P/E based on next year's expected earnings

Definition

Forward P/E uses analysts' consensus earnings estimates for the next 12 months instead of historical earnings. Because it's forward-looking, it better reflects where the company is heading.

Current Stock Price ÷ Estimated EPS (next 12 months)

Example

If NVDA trades at $900 and analysts expect $25 EPS next year, Forward P/E = 900 ÷ 25 = 36x.

Typical range

Forward P/E < trailing P/E usually indicates expected earnings growth

See it in a Brief