The appropriate price-earnings ratio (P/E ratio) to be used for stock valuation can be calculated at any time by dividing the current stock price by the last twelve months of earnings per share.

Question

Quizplus · Accepted Answer

For companies with cyclical earnings, a P/E ratio using the last 12 months earnings might be misleading, because these earnings could be high.

The Appropriate Price-Earnings Ratio (P/E Ratio) to Be Used for Stock