1. ## Trailing P/E ratio

Hi,

Anyone knows the difference:

A. Earnings Per Share Trailing Twelve Months
B. Earnings Per Share Last Four Quarters

I need to calculate the Trailing P/E for a specified share/stock.

According to http://www.investopedia.com/terms/t/trailingpe.asp, the Trailing P/E ratio is equal to "Current Share Price / Earnings Per Share Trailing Twelve Months".

But I have a little confusion about the "last four quarters" and "trailing twelve months". Are they the same thing or different thing?

2. ## Re: Trailing P/E ratio

You might do better in an investment forum. Here's one:
http://invested.com.au/

There are plenty of others.

3. ## Re: Trailing P/E ratio

Hi Raymott,

Thanks for your suggestion. I will try it later.

Could you help to have a look at the above link "http://www.investopedia.com/terms/t/trailingpe.asp"?

It says "Trailing price-to-earnings (P/E) is calculated by taking the current stock price and dividing it by the trailing earnings per share (EPS) for the past 12 months".

An then under section "BREAKING DOWN 'Trailing Price-To-Earnings - Trailing P/E'", it says "The P/E ratio is calculated by dividing a company's stock price by its earnings from the most recent fiscal year".

It seems investopedia.com has mixed up the "the past 12 months" and "the most recent fiscal year". I think "the past 12 months" and "the most recent fiscal year" are not the same thing.

Can you help to check? Thanks.

4. ## Re: Trailing P/E ratio

Yes, you are right - they are not the same thing. Nor is "the most recent four quarters". But did you read the whole page?
In the last paragraph, it says:
A disadvantage of the P/E ratio is that stock prices are constantly moving, while earnings remain fixed. Analysts attempt to deal with this issue by using the trailing P/E ratio, which uses earnings from the most recent four quarters rather than earnings from the end of the last fiscal year.

I take this to mean that there are different ways to calculate the Trailing P/E ratio (with different results), and that economists do it this way (above).
But the definition uses 12 months. This can be taken as the 12-month result from the last fiscal year, or - as economists do - the last four quarterly results, whichever quarters are most recent (ie. trailing). So, instead of getting one Trailing P/E ratio each year (Current Share Price/ 2015 fiscal year earnings), then (Current Share Price/ 2016 fiscal year earnings etc.) you get one each quarter - (Share Price / Jan+Apr+Jul+Oct), then (Share Price / Apr+Jul+Oct+Jan) etc.
So, it's more up-to-date using the trailing quarters method. It's still 12 months, but it's four quarters - so the definitions are confusing, but not contradictory.

5. ## Re: Trailing P/E ratio

PS: And to your initial question, I don't think you can tell just from the term "Trailing 12-month P/E ratio" whether they mean 12 monthly or four quarterly results. It can't be one yearly result, because that isn't trailing.

#### Posting Permissions

• You may not post new threads
• You may not post replies
• You may not post attachments
• You may not edit your posts
•