Leading vs. trailing P/E

A

archived_user

New member
Joined
Jun 18, 2026
Messages
0
Reaction score
0
Does anyone have an easy way to remember that it’s the trailing P/E that has (1+g) in the numerator as opposed to the leading P/E? I keep forgetting it.
 
This is how I’ve internalised it, maybe it might help.
Leading P/E is leading the race, therefore it doesn’t need 1 + g to help it catch up… Leading P/E = (1 - b) / (r - g)
Trailing P/E is trailing in the race, therefore help it out with a little (1 + g) yo! Trailing P/E = (1 - b) (1 + g) / (r - g)
…
Stupid I know, but I haven’t messed this up since I started using it haha.
 
No problem at all mate, best of luck with the last couple of days prep
 
Assuming earnings are going up, Leading PE will be smaller than Trailing PE because Leading PEs denominator will be later due to increased earnings, meaning trailing will be larger. Larger by (1+g).
Not as fun as studyguy18’s approach tho.
studyguy18 wrote:
This is how I’ve internalised it, maybe it might help.
Leading P/E is leading the race, therefore it doesn’t need 1 + g to help it catch up… Leading P/E = (1 - b) / (r - g)
Trailing P/E is trailing in the race, therefore help it out with a little (1 + g) yo! Trailing P/E = (1 - b) (1 + g) / (r - g)
…
Stupid I know, but I haven’t messed this up since I started using it haha.
Click to expand...
 
You must log in or register to reply here.
Back
Top