Stock Market Briefing: S&P Trailing P/E Ratios January 31, 18 Dr. Edward Yardeni 16-972-7683 eyardeni@ Joe Abbott 732-497-6 jabbott@ Mali Quintana 48-664-1333 aquintana@ Please visit our sites at www. blog. thinking outside the box
Table Of Contents Table Of Contents 1- January 31, 18 / Stock Market Briefing: S&P Ratios www.
32 28 Figure 1. S&P P/E RATIOS S&P P/Es Trailing (using operating earnings)* (.8) Forward** (18.) 32 28 24 24 Jan 16 16 12 12 8 89 9 91 92 93 94 9 96 97 98 99 1 2 3 4 6 7 8 9 11 12 13 14 16 17 18 19 8 * Using quarterly average of daily data for S&P price index, and 4-quarter trailing operating earnings. ** S&P stock price index divided by S&P 12-month forward consensus expected operating earnings. Source: Thomson Reuters I/B/E/S and Standard & Poor s. 4 Figure 2. S&P P/E RATIOS Capped at 4 due to extreme values 4 4 4 3 S&P P/Es Trailing (using reported earnings)* (23.) Forward** (18.) 3 2 Jan 2 78 79 8 81 82 83 84 8 86 87 88 89 9 91 92 93 94 9 96 97 98 99 1 2 3 4 6 7 8 9 11 12 13 14 16 17 18 19 * Using 4-quarter trailing reported earnings. ** S&P stock price index divided by S&P 12-month forward consensus expected operating earnings. Note: Shaded red areas denote S&P bear market declines of % or more. Yellow areas show bull markets. Source: Thomson Reuters I/B/E/S and Standard & Poor s. Page 1 / January 31, 18 / Stock Market Briefing: S&P Ratios www.
6 Figure 3. P/E RATIO FOR S&P (Using Trailing Reported Earnings)* 6 Capped at 4 due to extreme values 4 4 3 37 39 41 43 4 47 49 1 3 7 9 61 63 6 67 69 71 73 7 77 79 81 83 8 87 89 91 93 9 97 99 1 3 7 9 11 13 17 19 21 23 * Using 4-quarter trailing reported earnings. Source: Standard & Poor s. 3 Figure 4. S&P P/E BASED ON TRAILING EARNINGS 3 2 * (.8) 2 Average =.1 3 37 39 41 43 4 47 49 1 3 7 9 61 63 6 67 69 71 73 7 77 79 81 83 8 87 89 91 93 9 97 99 1 3 7 9 11 13 17 19 21 * Using quarterly average of daily data for S&P price index, and 4-quarter trailing reported earnings through -1988, then operating earnings. Source: Standard & Poor s. Page 2 / January 31, 18 / Stock Market Briefing: S&P Ratios www.
Figure. S&P P/E BASED ON TRAILING EARNINGS vs. CPI 2 * (.8) CPI (yearly percent change) (2.1) 2 Dec - 3 37 39 41 43 4 47 49 1 3 7 9 61 63 6 67 69 71 73 7 77 79 81 83 8 87 89 91 93 9 97 99 1 3 7 9 11 13 17 19 21 - * Using quarterly average of daily data for S&P price index, and 4-quarter trailing reported earnings through -1988, then operating earnings. Source: Standard & Poor s and Bureau of Economic Analysis. Figure 6. RULE OF : S&P P/E BASED ON TRAILING EARNINGS vs. CPI INFLATION 2 2 Dec * (.8) Minus CPI (yearly percent change) (17.9) 3 37 39 41 43 4 47 49 1 3 7 9 61 63 6 67 69 71 73 7 77 79 81 83 8 87 89 91 93 9 97 99 1 3 7 9 11 13 17 19 21 23 * Using quarterly average of daily data for S&P price index, and 4-quarter trailing reported earnings through -1988, then operating earnings. Source: Standard & Poor s and Bureau of Economic Analysis. Page 3 / January 31, 18 / Stock Market Briefing: S&P Ratios www.
2 Figure 7. S&P P/E BASED ON TRAILING EARNINGS vs. -YEAR TREASURY BOND YIELD * (.8) -Year Bond Yield (percent) (2.6) 2 Jan 3 7 9 61 63 6 67 69 71 73 7 77 79 81 83 8 87 89 91 93 9 97 99 1 3 7 9 11 13 17 19 21 23 * Using quarterly average of daily data for S&P price index, and 4-quarter trailing reported earnings through -1988, then operating earnings. Source: Standard & Poor s and Federal Reserve Board. 18 16 Figure 8. S&P EARNINGS YIELD vs. -YEAR TREASURY BOND YIELD (percent) 18 16 14 12 S&P Earnings Yield* (4.8) -Year Bond Yield (2.6) 14 12 8 8 6 6 4 2 Jan 4 2 3 7 9 61 63 6 67 69 71 73 7 77 79 81 83 8 87 89 91 93 9 97 99 1 3 7 9 11 13 17 19 21 23 * Using quarterly average of daily data for S&P price index, and 4-quarter trailing reported earnings through -1988, then operating earnings. Source: Standard & Poor s and Federal Reserve Board. Page 4 / January 31, 18 / Stock Market Briefing: S&P Ratios www.
2 Figure 9. S&P EARNINGS YIELD & NOMINAL GDP GROWTH Earnings Yield* (4.8) Nominal GDP (yearly percent change) (4.4) 2 Q4-48 2 4 6 8 6 62 64 66 68 7 72 74 76 78 8 82 84 86 88 9 92 94 96 98 2 4 6 8 12 14 16 18 22 - * S&P trailing earnings divided by stock price index. Using quarterly average of daily data for S&P price index, and 4-quarter trailing reported earnings through -1988, then operating earnings. Source: Standard & Poor s Corporation and Bureau of Economic Analysis. Page / January 31, 18 / Stock Market Briefing: S&P Ratios www.
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