The forward P/E ratio is calculated using the formula:
Forward P E=Current Share Price/Projected EPS
I have only Projected the EPS. Mr. market will give price according to market sentiments. I think valuations are within 2-year forwards. When valuations exceed 2-year forwards and start approaching 3-year forwards, I will find myself uncomfortable and perhaps sell. A lower forward P/E ratio may indicate a stock is undervalued relative to its future earnings potential. For Trent Forward P/E are Year 1: 103.93,Year 2: 73.66,Year 3: 52.63,Year 4: 37.56,Year 5: 26.87. It is overvalued at 1 year Forward PE of approx. 104. but I think it OK at 2 Year forward PE of approx. 74. I need to track Quarter to Quarter results and EPS, If they are better than projected then I am OK, but if I see a decline in EPS the will take a call accordingly.
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