Definition
Trailing P/E ratio divides the current stock price by the earnings per share from the most recent 12-month period. It uses actual reported earnings rather than estimates, making it more reliable but backward-looking. Most commonly cited P/E ratios are trailing P/E.
Formula
Trailing P/E = Current Stock Price / Trailing 12-Month EPS
Example
A company with a stock price of $50 and trailing EPS of $2.50 has a trailing P/E of 20x, meaning investors pay $20 for every $1 of actual earnings.
FAQ
What is Trailing P/E Ratio?
A valuation ratio using actual earnings from the past 12 months.
How do you calculate Trailing P/E Ratio?
A common formula for Trailing P/E Ratio is: Trailing P/E = Current Stock Price / Trailing 12-Month EPS
Why is Trailing P/E Ratio important?
Trailing P/E Ratio helps investors evaluate valuation and make more informed decisions.