stockAnalyst (version 1.0.1)

leadingPEnext4Qs: Calculates Leading PE Multiple based on average of expected EPS for the next four quarters.

Description

The Leading PE, also know as forward PE is a major and logical alternative to the trailing PE because valuation is naturally forward looking. In the definition of forward PE, analysts have interpreted, “expected earnings of next year” as expected EPS for the next four quarters or the next 12 months or the next fiscal year (Jerald E. Pinto, 2020). In this method, first definition of Leading PE (i.e., the next four quarters) is used.

Usage

leadingPEnext4Qs(currentShPr, Q1EPS, Q2EPS, Q3EPS, Q4EPS)

Value

Input values to five arguments currentShPr, Q1EPS, Q2EPS,Q3EPS, and Q4EPS .

Arguments

currentShPr

number.

Q1EPS

number.

Q2EPS

number.

Q3EPS

number.

Q4EPS

number.

Author

MaheshP Kumar,

Details

In the given example, forecasts of EPS are $0.15 for the quarter ending 31 March 2019, $0.18 for the quarter ending 30 June 2019, $0.18 for the quarter ending 30 September 2019, and $0.24 for the quarter ending 31 December 2019. The sum of the forecasts for the next four quarters is $0.15 + $0.18 + $0.18 + $0.24 = $0.75, and the leading PE for this stock is $15/$0.75 = 20.0.

References

Pinto, J. E. (2020). Equity Asset Valuation (4th ed.). Wiley Professional Development (P&T). https://bookshelf.vitalsource.com/books/9781119628194

Examples

leadingPEnext4Qs(currentShPr=15,Q1EPS=0.15,Q2EPS=0.18,Q3EPS=0.18,Q4EPS=0.24)