A price-to-earnings ratio (P/E) divides a share price by earnings per share (EPS). A trailing P/E uses earnings the company has already reported. A forward P/E uses forecasts of earnings to come. The price is the same, but the earnings are not, so the 2 can differ a lot.
What is a trailing P/E?
It uses the EPS of the last 12 months, often called TTM (trailing twelve months). Those earnings are known, but they look back. A one-off gain or loss in those months moves the ratio.
What is a forward P/E?
It uses analysts’ average forecast of EPS for the next 12 months. It looks ahead, but forecasts can be wrong, and they change as analysts revise them. The EPS revisions guide covers those changes.
A worked example
A made-up company trades at ₹1,200. It earned ₹40 a share over the last 12 months. Analysts expect ₹48 over the next 12.
| Measure | EPS used | P/E |
|---|---|---|
| Trailing P/E | ₹40, last 12 months | 1,200 ÷ 40 = 30 |
| Forward P/E | ₹48, next 12 months (forecast) | 1,200 ÷ 48 = 25 |
The forward P/E is lower because the forecast has EPS growing 20%. If analysts cut the forecast to ₹44, the forward P/E rises to about 27.3, with no change in the price.
How should you read the 2 together?
- Forward below trailing: forecasts expect EPS to rise. The bigger the gap, the more growth is assumed.
- Forward above trailing: forecasts expect EPS to fall.
- Check the forecasts’ direction: a low forward P/E rests on forecasts. If they keep being cut, it rises.
- Compare like with like: the same measure, for companies in the same industry.
How does Chart in Motion show them?
For a stock, the Valuation row of the Financials panel shows 3 figures:
- PE: the share price over 1 full fiscal year of EPS. That is the last reported year, or the current year’s full-year forecast once 3 of its quarters are reported. It is the same year implied growth uses.
- Next 12M P/E: the share price over a blend of this fiscal year’s and next fiscal year’s EPS forecasts. Each year counts for the share of the next 12 months that falls in it, in whole months after the current one.
- Next 12M PEG: a P/E set against forecast growth, blended by quarter. The PEG guide explains it.
A made-up example: an Indian company’s year ends in March. In October 2026, 5 months of its FY27 are left (November to March), so the FY27 forecast counts for 5/12 and the FY28 forecast for 7/12.
Illustrative: in October 2026, 5 of the next 12 months fall in FY27 and 7 in FY28, so the FY27 forecast (₹48) counts 5/12 and the FY28 forecast (₹60) 7/12. At ₹1,100 a share, the Next 12M P/E is 20.
The blend moves on each month, so it never leans on a year that is almost over. Each figure shows a dash when a forecast is missing or the EPS it uses is zero or negative.
As watchlist columns, TTM P/E is the price over the last 12 months of reported EPS; 12M P/E and 12M PEG match the panel.
For an index, the Indices panel (Index growth and valuation on a phone) shows 1 PE: the members’ combined market value over their combined earnings for the last 12 months. Beside it are trailing and forward EPS growth, each with its own PEG.
What are the limits?
- Losses: a P/E means nothing when EPS is zero or negative.
- Cycles: at peak earnings, a cyclical company’s P/E looks low just before earnings fall.
- Coverage: a smaller company may have few analysts, so 1 forecast can move the average.
- Not a verdict: a low P/E does not mean cheap, and a high one does not mean expensive.
See it in the app
Open any stock and its Financials panel shows PE, Next 12M P/E and Next 12M PEG. They are in every plan: a Free account can open 25 stocks a day, and Pro and Pro+ have no daily limit. More on the features page.