Trailing P/E

trailing P/E

The price-earnings ratio of a firm's common stock calculated as the current stock price divided by the previous year's earnings per share. Compare forward P/E.

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Trailing P/E

The price of a security per share at the present time divided by the trailing earnings per share over the previous year. It is the most commonly used form of the P/E ration because it is based on actual, rather than projected, earnings. A trailing P/E ratio is thus the most accurate way to measure a security's valuation, that is, the fair value of a stock in a perfect market.