Trailing Price-to-Earnings
The price-to-earnings ratio computed using earnings actually reported over the last twelve months.
Formula
Trailing P/E = Current Market Price / Earnings per Share over the Trailing Twelve Months
Unit
ratio (x, times)
In depth
Trailing P/E uses audited history rather than forecasts, which makes it the honest number and also the backward-looking one. Its weakness appears at turning points: after a collapse in profits the trailing P/E balloons just as the shares become cheap, and after a peak year it looks lowest just as earnings are about to fall. For companies with lumpy or seasonal earnings, the twelve-month window smooths quarters unevenly depending on where the year is cut. Screeners default to trailing figures, so a screen for low P/E systematically surfaces companies at cyclical peaks.
Worked example
Trailing twelve-month EPS of ₹3.00 at a price of ₹60 gives a trailing P/E of 20. If the next four quarters deliver ₹1.50, the same price will show a trailing P/E of 40 with no change in the shares at all.
Illustrative figures, chosen so the arithmetic is easy to follow. Not a live price and not a valuation of any company.
Educational reference only
This entry explains what “Trailing Price-to-Earnings” means. It is not investment advice and not a recommendation to buy or sell any security. Any numbers above are illustrative, not live prices, and nothing here predicts price direction or rates a stock. Consider your own circumstances and consult a SEBI-registered investment adviser before acting.