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.

Vincit qui se vincit. Publilius Syrus

Ⓒ nomis  www.nomisVentures.com

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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.

Brilliant.  Thanks so much!

Vincit qui se vincit. Publilius Syrus

Ⓒ nomis  www.nomisVentures.com

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.