Forward P/E, explained. The P/E based on next year’s expected profits.

Forward P/E, explained. The P/E based on next year’s expected profits.

Forward P/E divides today’s share price by the earnings analysts expect over the coming year, instead of the past 12 months.

Share price ÷ Expected EPS

Stock at $100, expected EPS of $6.25 → forward P/E of 16.

Right now:

$AAPL 36.3x

$AMZN 23.8x

$MSFT 22.1x

$GOOGL 20.8x

$META 18.5x

$NVDA 13.3x

How to read it:

• Forward below trailing: profits are expected to grow.

• Forward above trailing: profits are expected to shrink.

• It is only as good as the analyst estimates behind it.

Watch out: Estimates change. A “cheap” forward P/E can disappear after one guidance cut.

Next up: CPI, the inflation report.

Education only. Not financial advice.