Forward Multiple

Formal

If a company is trading on what is called a ‘forward multiple’ its shares are valued at a multiple of its prospective earnings rather than the value of its underlying assets. (See also PE ratio). For example, shares may be valued on a forward multiple of 8 times earnings if respectable groth is anticipated.

Real-world Example

An investor values a fast-growing tech company at 15 times its forecast earnings for next year - a forward multiple, based on expected future earnings rather than historical results.