Published on 4 Mar 2024 on Market Watch
Some investors love to ride along with momentum, and the biggest question is always how long the big market moves may last. Over the past year, the U.S. stock market as a whole has gotten more expensive on a forward price-to-earnings basis. So this may be a good moment to dig a bit deeper into this commonly used valuation metric and highlight stocks that combine momentum with declining P/E ratios.
A stock’s forward P/E ratio is its price divided by the consensus earnings-per-share estimate, among analysts working for brokerage firms, for that company over the next 12 months. It can be useful to see how a stock’s price is moving relative to the rolling profit estimates.