Forward PE (Price/Earnings) Ratio Excel Template

Description
Only one difference exists between the PE ratio of a company and the forward PE ratio of the same company. The difference is the earnings we use to calculate. In PE ratio, we use earnings from the previous year yet in forward PE, we use the projected earnings for the next year.

As with the PE ratio, the forward PE is a great tool to measure the financial health of a company. However, all investors should look at several other financial ratios along with the forward price earning ratio to come to the conclusion that whether they should invest in a company or not.

The formula is the following:

Forward PE ratio = Market Price per Share / Projected Earnings per Share

We need to consider two components:

1) Market price per share: as per the market price can change over time, at different times, the market price would vary. We need to divide the market price by the number of outstanding shares of the company to calculate the market price per share.
2) Projected earnings per share: as an investor, you can look at different publications to find out the projected earnings. Or otherwise, you can hire a financial analyst.

Forward Earnings per Share can be calculated using:

Forwards EPS = Projected Earnings / Numbers of Outstanding Shares of the Company

The use of this formula will help investors know how much a company will earn per share.