The most-recent stock price divided by the mean EPS estimate for the current fiscal year.
Origin
Pricing information is received from ComStock, a division of Interactive Data Corporation.EPS Estimates are provided by Multex.
Benefit
This ratio gives some indication of how cheap or expensive a stock is compared with consensus earnings estimates. The lower the Forward P/E, the cheaper the stock.
For the Pros
Some investors like to incorporate Forward P/E in their screens in addition to Price/Earnings. A high Price/Earnings and a low Forward P/E may indicate a company that is experiencing what analysts see as a temporary earnings problem—analysts are expecting its future earnings to be much higher than its recent earnings.