Every term is defined twice: once the way a filing would put it, and once the way somebody would explain it to you across a table. The second one is usually the one that sticks.
Showing 2 terms
Profit averaged across a full economic cycle, used to normalise a cyclical company’s valuation.
The only sane denominator for a cyclical. Trailing earnings get the answer wrong at both ends of the cycle, confidently.
Profit at the top of a cycle, which is not representative of what the business earns across a full one.
This is exactly when a cyclical looks cheapest on P/E, because the denominator is temporarily swollen. Normalised earnings or price-to-book describe it more honestly.