Basics

Forward / Trailing

Compute a metric from past results and it is trailing; from future estimates and it is forward — the same PER differs in value by which.

In plain terms

To compute a metric like PER you need "earnings," and which earnings you use splits it in two. Use results already past and it is trailing; use estimated future earnings and it is forward.

For example, trailing PER is based on "the profit actually earned over the past year," while forward PER is based on "the profit expected to be earned this year (or next)." For the same price, the value differs by which earnings you divide by.

What it tells you

Trailing is "what actually happened," so it is certain but past. Forward is "expectation ahead," capturing the future but being an estimate that can miss. The two trade certainty for future-looking.

A growing company is expected to have larger future earnings, so forward PER usually comes out lower than trailing PER (the denominator, expected earnings, is larger). The gap between the two hints at how much growth the market expects from that company.

Formula

trailing = computed from results already past (e.g. the last 12 months, TTM)
forward = computed from estimated future results (analyst expectations)

What high or low means

If a forward metric looks much better than trailing, that reflects an expectation that "earnings will rise a lot ahead." Whether that expectation proves right is a separate matter.

Estimates (forward) differ by analyst and change often. So remember a forward metric is only "the current expectation," not a settled fact.

Caution

A forward metric is an estimate and can be wrong. A low forward PER resting on rosy estimates can make something "look cheap," but if those estimates miss, it loses meaning. Always read forward numbers with the "estimate" tag attached.

Trailing is certain but past, so for a company whose business changed sharply recently, the trailing metric may not keep up with reality. Both have limits, so it is best to read them together.

When looking at any metric, always check whether it is forward or trailing. Mixing them in a comparison leads to wrong conclusions (PER and the like on our screen and in this dictionary are on the trailing TTM basis).

Metrics to read alongside

TTM (Trailing Twelve Months)

The most common form of trailing is the trailing twelve months (TTM) sum. Knowing TTM makes clear what a trailing metric is based on.

PER (Price-to-Earnings Ratio)

The same PER is trailing PER if based on past results and forward PER if based on estimated earnings, so the value differs. You have to know which to compare PER properly.

Consensus (Analyst Consensus)

A forward metric uses the average of analysts' estimates — the consensus — as its denominator. Knowing where the consensus sits helps you understand the basis of a forward metric.

See it in real stocks

Search US stocks on Stocklore to see Forward and other financial metrics alongside the sector average.

AAPL Apple Inc.MSFT Microsoft Corporation NVDA NVIDIA Corporation AMZN Amazon.com, Inc.Search stocks →

Exactly how Stocklore computes this metric (formula, thresholds, SEC source) is on the methodology page.

This explanation is for information and reference only and is not a recommendation to buy or sell any security. Investment decisions and their consequences are your own.