Forward looking ?

yourstruly · Jun 9, 2015

<nothing to do with exam>
What is forward looking earnings ? What is its best value to use ?

pokhim · Jun 9, 2015

I don’t understand your question…
Do you mean using E1?

Simon1414 · Jun 9, 2015

I figure this was E1 - so forward-looking P/E ratio would be P0/E1 . . (I hope)

yourstruly · Jun 9, 2015

true. But which value of E1 to be used. Is it “expected” or is it “E0 x (expected growth rate” ?

Simon1414 · Jun 9, 2015

I would think the former - would be cruel if the latter!

vicky_cool400 · Jun 9, 2015

this seems quite a confusing q :
My guess will be E1

yourstruly · Jun 9, 2015

In valuation models we always use E1 and not E0, right ?

Galli · Jun 9, 2015

justified forward P/E uses E1, what’s more imporant is using the correct price…

pokhim · Jun 9, 2015

Galli wrote:
justified forward P/E uses E1, what’s more imporant is using the correct price…

(1-payout)(1+g)/r-g = P..
This is level 2 stuff.

JuniorCk8 · Jun 9, 2015

expected forward earnings / current price