The forward version of the price-earnings (PE) ratio. The forward PE relates a stock’s current price to its “predicted”/ “forecasted” earnings per share (EPS). This ratio helps investors assess the price to be paid for each monetary unit of a company’s projected earnings. As a forward multiple, it takes into account the future or forward profitability of a company (typically, over the next 12 months). For a growing business, it shall always be lower than the trailing PE due to the fact that expected earnings must exceed current or historical earnings. Otherwise, the company would be perceived as a business experiencing a deteriorating profitability.

It is also known as a leading PE.