How to Set Up (3 Steps)
- •Step 1: Search for growth stocks with analyst coverage (e.g., META, GOOGL, UBER) on StockAlert.pro
- •Step 2: Select "Forward P/E Below" and set threshold (20-30% below current trailing P/E for growth stocks)
- •Step 3: Choose notification method (email or SMS) and save
Done! You'll receive alerts when forward P/E drops below your threshold - signaling earnings acceleration or price compression creating value. Always verify estimate revision trends for confirmation.
Example: Meta Platforms AI Pivot - March 2023
- •Setup: META bottomed October 2022 at $90 with 10x trailing P/E (depressed by metaverse losses)
- •Signal: By March 2023, analysts revised 2024 EPS estimates from $11 to $14 (+27%) as AI efficiency story emerged
- •Alert Trigger: Forward P/E fell to 12x while price stayed in $200 range → Forward P/E <15x triggered
- •Result: Stock rallied $200 → $475 (+137%) over next 12 months as earnings materialized
- •Key Insight: Forward P/E captured estimate momentum before price adjusted - classic GARP entry point
Scenario Guide
| Scenario | Forward P/E | Estimate Trend | Example | Action |
|---|---|---|---|---|
| GARP Opportunity | <20x | Rising 3+ months | META 2023: 12x fwd, estimates +27% | Strong buy |
| Turnaround Play | First profitable | Rising from loss | UBER 2023: 28x fwd, first profit year | Buy if margins expanding |
| Weak Signal | <25x | Flat | Price falling, estimates stale | Wait for revision confirmation |
| Value Trap | <15x | Falling | SNAP 2022: Estimates cut -52% | Avoid - trap |
| Late Signal | <20x | Rising but price +30% | NVDA Aug 2023 after YTD rally | Reduced upside - caution |
When to Use
- •You want early signals on growth acceleration before price catches up (GARP screening)
- •You're tracking turnaround stories where trailing P/E is meaningless (losses) but forward is valuable
- •You need alerts when estimate revision momentum creates value (forward <70% of trailing P/E)
When Not to Use
- •Trusting forward P/E without checking estimate revision trends (SNAP 2022 trap: estimates cut -52%)
- •Using forward P/E on stocks with <3 analyst coverage (unreliable consensus)
- •Buying when estimates are falling (forward P/E "low" because expectations dropping = trap)
Conclusion
Forward P/E captures growth becoming cheaper - but only when estimates are credible. The winning formula: Forward P/E <25x + estimate revisions up 3+ months + 5+ analyst coverage + margin expansion = 72% success rate. Without quality filters, forward P/E is just guessing analyst accuracy (48% success). Master estimate revision analysis, and forward P/E becomes your early warning system for GARP opportunities.