# Average P/E Ratio

The historical average price-to-earnings ratio, typically calculated over 5-10 years. This ratio is applied to the EPS forecast to project future stock price...

Canonical: https://www.manifestinvesting.com/glossary/pe-ratio

The historical average price-to-earnings ratio, typically calculated over 5-10 years. This ratio is applied to the EPS forecast to project future stock price. Using an average helps normalize for market cycles and temporary over/undervaluation.