Let say that I know the EPS for fiscal year of 2010 that ended on 12/31/10, if I were to calculate the PE ratio, should I use the stock price on 12/31 or of today?
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historical PE should be based on the historical price. otherwise you're just assuming that the company will hit that EPS in 2011. if that is your assumption, fine. if not, you should look up a projected consensus # or come up with your own and figure out a forward PE
Thanks. so I should use the stock price on 12/31/10, right?
No, you use current price. PE: Current price / most recent full year EPS. Forward PE: Current Price / EPS estimate of future
thank you
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