What Is the Price-to-Earnings (PE) Ratio? - TheStreet Definition

Dictionary of Financial Terms

Current share price divided by annual earnings per share. Some investors prefer to use the "12-month trailing" earnings in the denominator, because that's actual earnings, while others prefer using "forward" earnings estimates. Estimates, generally representing analysts' consensus of future earnings, are considered more timely, though some say they're often too hopeful.

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