What is forward P/E?
In short: forward P/E is a company's share price divided by analysts' forecast earnings per share for the next twelve months. It shows how much investors pay for each dollar of profit the company is expected to make, rather than profit it has already reported.
How is forward P/E calculated?
Forward P/E is calculated by dividing the current share price by the earnings per share that analysts forecast for the next twelve months, usually the average of all published estimates. A $30 share with forecast earnings of $2 a share has a forward P/E of 15, meaning ## How is forward P/E calculated?5 paid for each expected dollar of profit.
Forward P/E = share price ÷ forecast earnings per share. The forecast is usually the average estimate of the analysts who cover the company. Compare it with the trailing P/E, which uses reported earnings.
Reading forward and trailing P/E together
When forward P/E is well below trailing P/E, analysts expect earnings to grow. When it is above, they expect earnings to fall.
| Company | Trailing P/E | Forward P/E |
|---|---|---|
| BHP (BHP.AX) | 22.0 | 16.4 |
| Commonwealth Bank (CBA.AX) | 23.3 | 22.3 |
| Wesfarmers (WES.AX) | 30.1 | 26.1 |
Figures as of 4 October 2026. On these forecasts, analysts expect BHP's earnings to rise most.
Where forward P/E misleads
- Forecasts are often wrong, and tend to be optimistic, especially further out.
- Few analysts, weak signal. For small companies the "consensus" may be one or two estimates — or none.
- It cannot be checked yet. A trailing figure is a fact; a forward figure is an opinion.
How ShareSift uses it
On ShareSift, a forward P/E below 15 (and positive) earns 8 of 100 points in the ShareSift value score.
Frequently asked questions
Is forward P/E more reliable than trailing P/E?
Not necessarily. Forward P/E looks ahead, which is what matters for the price, but it rests on analysts' forecasts, which are often wrong and tend to be optimistic. Trailing P/E is based on reported results. Looking at both shows what the market expects to change.
Why do some companies have no forward P/E?
A forward P/E needs analysts' earnings forecasts. Small companies are often covered by few analysts or none, so there is no consensus estimate to divide by. ShareSift treats the missing figure as a failed test in the value score rather than estimating it.
Sources
- ASIC Moneysmart, Choose your investments — the Australian regulator's guide to assessing investments.
- Company figures: Yahoo Finance via ShareSift, as of 4 October 2026. They change daily.
This information is general in nature and does not take into account your objectives, financial situation or needs. ShareSift is not a financial adviser and does not hold an Australian Financial Services Licence. Companies named are examples of how the measure works, not recommendations. Consider whether any information is appropriate for you and seek independent advice before making an investment decision.