The forward P/E Ratio is similar to the standard price to earnings ratio, except that it uses estimated future earnings instead of past earnings.

While the normal P/E ratio looks at earnings over the previous 12 months, the forward P/E ratio looks at earnings over the next full year or next 12-month period.

For example, if a stock is trading at 200 dollars and predicted earnings for the next year are 10 dollars per share, then the forward P/E ratio is 20.

### Key Points

- A low forward PE ratio indicates that a stock is cheap relative to its future earnings.
- If the forward PE is lower than the normal (trailing) PE, that means earnings are expected to increase.
- This ratio relies on estimates and predictions, which are often wrong. It is not as accurate as the trailing PE ratio.
- Estimated next year's earnings are usually based on the average predictions of analysts that cover the stock.

## Forward PE Calculator

## How to calculate

Here's how to calculate the forward PE ratio:

- Find the company's current stock price.
- Find the stock's estimated earnings per share for the next year.
- Divide the stock price by the forecasted earnings per share.

## Example

Apple's stock price is $351. The predicted earnings per share for the next fiscal year are $14.86. This gives Apple a forward PE ratio of:

$351 / $14.86 = **23.62**