Hey, Can somebody pls explain the reliability of the both formula for the Forward PE calculation , because sometimes using the EPS latest quarter can can produce misleading Forward PE because of exceptional income (or any spike in income bcz of exceptional items). And also using the latest quarter EPS may not depict the true picture in case of cyclical industries. So can we use the average EPS growth rate instaed ?
Formula 1 :
Forward PE = Current price / (EPS latest quarter * 4)
Formula 2 :
Forward PE = Current price / (EPS((100+EPS growth 3Years )/100))
Thanks
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