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Vendor forward P/E silently uses the wrong fiscal year, and it flips verdicts
Claim
Twice on the same day, on two different names, the reported forward P/E was built on the wrong fiscal year — and in both cases it was the number the verdict rested on.
| ticker | vendor fwd P/E | vendor implied EPS | true forward EPS | true fwd P/E | error |
|---|---|---|---|---|---|
| TSM | 19.31x | ~$21.60 | $15.91 (2026 consensus) | 26.2x | EPS 36% too high |
| QCOM | 14.8x | $10.30 | ~$8.60 (FQ4 guide annualised) | 18.9x | Used a year already 3/4 reported |
TSM is the cleaner illustration. The company's own prints settle it: Q1 2026 EPS was NT$22.08 (≈$3.49/ADR) and Q2 2026 was US$4.31/ADR — so H1 delivered ~$7.80. A full year near $16 is arithmetically consistent; a full year near $21.60 is not. Independent vendors agreed with the corrected figure (GuruFocus 25.3x, others 24.5x); Yahoo was the outlier, not the consensus.
What breaks
- The verdict moves a full step. The 2026-08-04 tech sweep called TSM "ACCUMULATE, cheapest quality in the list, FV $432–518" on 19.3x. At the correct 26.2x the fair value fell to $350–480 and the verdict became WATCH — the stock sat at fair value, not below it.
- The watchlist trim convention inherits it directly.
Trim NNx fwdcomputes its dollar level as NN × (price ÷ forward P/E), so a forward EPS that is 36% too high sets a trim 36% too high and instructs holding through the exit. Compounds with [[pitfall-multiple-trim-inverts-on-peak-cycle-cyclicals]]. - It always errs toward "cheap." A forward EPS drawn from a later year on a growing company is too high, so the multiple looks too low. The error manufactures false bargains, which is the direction that costs money.
- Screens are worst affected: a
--screen-style pass ranks on the vendor field with no chance to sanity-check it.
How to apply
- Reconstruct the year from reported quarters before quoting any forward multiple. Sum the reported quarters of the fiscal year, add the guide for the rest, compare to the vendor's implied EPS. Two minutes, and it is the check that would have caught both cases.
- Tripwire: an implied forward EPS more than ~25% above TTM EPS on a company not in a step-change. TSM's implied $21.60 against $11.64 TTM was an 86% jump — visible without any research.
- Cross-check one independent vendor. GuruFocus/stockanalysis/finbox disagreeing with Yahoo by more than ~15% means Yahoo is using a different year. When they disagree, the majority is usually right and Yahoo is usually the outlier.
- Never let a screen-level forward multiple carry a verdict. A screen produces nominations,
not findings — see the tool-hierarchy note in CLAUDE.md on
fin.py --screen. This pitfall is the concrete reason that rule exists. - Related: [[pitfall-adr-book-value-corrupts-price-to-book]] (same day, same ticker, different field) · [[principle-primary-source-beats-vendor]] · [[pitfall-gate-cleared-by-adjective-not-arithmetic]].