At a recent price of $115, the shares are trading at 124 times this year's bottom-line forecast and just 66 times forward earnings.
2006-11-27 00:25:17 · 2 answers · asked by Anonymous in Business & Finance ➔ Investing
The company and a consensus of analysts have forecasted the earnings of the company out 12 months and divide it by the current price. Many people tend to use the Forward PE because it is a better indicator of where the company may go rather than where the company has been.
For example, a drug company may start selling a potential blockbuster drug next year. On this news the stock explodes, but since the company will not realized any profit until next year the current PE seems more expenses. Therefore we use the forward PE.
2006-11-27 14:49:29 · answer #1 · answered by James 2 · 0⤊ 0⤋
If I understand the question correctly, you are asking "what is the denomination of 'forward earnings'".
Forward earnings are in Earnings Per Share, which is denominated in dollars. EPS is calculated as Net Profit divided by weighted average share outstanding.
The price of $115 is 124x this current year's forecasted ($115/124 = $0.9274) EPS and 66x forward earnings of $1.7424 ($115/66).
2006-11-27 10:06:59 · answer #2 · answered by csanda 6 · 1⤊ 0⤋