There are many ways to measure the value of a stock. For doing basic analysis, the classic p/e ratio (price per share divided by earnings per share) is a useful measure. It gives you a sense of how many times one year’s earnings people are paying for the stock. However, most sources show p/e calculated by the trailing twelve months (TTM) of earnings. That can be deceptive. The p/e might be quite different going forward.
A shorthand way to at least get a sense of next year’s p/e, you can do quickly at Yahoo Finance. Look up a quote on your stock. Then click ‘Analysis’. It will show you the estimates for earnings by major analysts for this year and next. Divide the average estimate for next year’s earnings into the current stock price, and you have a rough guess of next year’s p/e.
Take 3M (symbol MMM). The current p/e for the stock is 21. Not super high, but not a bargain price for such a stodgy company. Next year’s average esimate is $10.92. Divide that into the stock price (as of today) and you get a more reasonable p/e of 14. Still not a mega bargain, but the p/e is a 1/3 less.
Use this methodology with caution. It assumes that the analysts are right about next year’s earnings. They could be wide of the mark high or low. But it at least gives you a sense of whether the company’s p/e going forward is reasonable.