Trailing price to earnings

Share price divided by earnings actually reported over the last twelve months.

Its virtue is that the denominator is a fact. Nobody's forecast is in it, which makes it the cleanest starting point.

Its weakness is timing. For a cyclical business the trailing multiple is at its lowest when earnings are at a peak and the stock is most dangerous, and at its highest when earnings are at a trough and the opportunity is best. Reading a steel company on trailing earnings has ended more portfolios than any other single mistake in relative valuation.

For cyclicals, use mid-cycle earnings or a different lens entirely.