S&P 500 Trailing P/E Ratios - Yardeni Research

S&P 500 Trailing P/E Ratios

Yardeni Research, Inc.

October 20, 2021

Dr. Edward Yardeni

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Joe Abbott

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Table Of Contents Table Of Contents

Trailing P/E

1-5

October 20, 2021 / S&P 500 Trailing P/E Ratios

Yardeni Research, Inc.



Figure 1.

32

S&P 500 P/E RATIOS

28

24

20

Trailing P/E

S&P 500 P/Es Trailing (using operating earnings)* (23.8) Forward** (21.1)

32

28

Q2

24

Sep 20

16

16

12

12



8

8

89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

* Using quarterly average of daily data for S&P 500 price index, and 4-quarter trailing operating earnings (I/B/E/S data). ** S&P 500 stock price index divided by S&P 500 12-month forward analysts' consensus expected operating earnings per share.

Source: I/B/E/S data by Refinitiv and Standard & Poor's.

Figure 2.

50

S&P 500 P/E RATIOS

45

50

Capped at 45 due to extreme values

45

40

35

S&P 500 P/Es

Trailing (using reported earnings)* (26.3)

Forward** (21.1) 30

25

20

40

35

30 Q2

25 Sep

20

15

15

10

10

5

5

78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20 22 24

* Using 4-quarter trailing reported earnings. ** S&P 500 stock price index divided by S&P 500 12-month forward consensus expected operating earnings.

Note: Shaded red areas denote S&P 500 bear market declines of 20% or more. Yellow areas show bull markets. Source: I/B/E/S data by Refinitiv and Standard & Poor's.

Page 1 / October 20, 2021 / S&P 500 Trailing P/E Ratios

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Trailing P/E

Figure 3.

50

50

P/E RATIO FOR S&P 500 (Using Trailing Reported Earnings)*

40

Capped at 45 due to extreme values

40

30

30

Q2

20

20

10

10

0

0

35 37 39 41 43 45 47 49 51 53 55 57 59 61 63 65 67 69 71 73 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11 13 15 17 19 21 23 25

* Using 4-quarter trailing reported earnings. Source: Standard & Poor's.

Figure 4.

35

S&P 500 P/E BASED ON TRAILING EARNINGS

30 Trailing P/E* (23.8)

25

Average = 15.5 20

35

30

25 Q2

20

15

15

10

10



5

5

35 37 39 41 43 45 47 49 51 53 55 57 59 61 63 65 67 69 71 73 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11 13 15 17 19 21 23 25

* Using quarterly average of daily data for S&P 500 price index, and 4-quarter trailing reported earnings through Q3-1988, then operating earnings. Source: Standard & Poor's.

Page 2 / October 20, 2021 / S&P 500 Trailing P/E Ratios

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Trailing P/E

Figure 5.

35

S&P 500 P/E BASED ON TRAILING EARNINGS vs. CPI

30

Trailing P/E* (23.8)

CPI (yearly percent change) (5.4) 25

20

35 30 25 Q2 20

15

15

10

10

5

Sep 5

0

0



-5

-5

35 37 39 41 43 45 47 49 51 53 55 57 59 61 63 65 67 69 71 73 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11 13 15 17 19 21 23 25

* Using quarterly average of daily data for S&P 500 price index, and 4-quarter trailing reported earnings through Q3-1988, then operating earnings. Source: Standard & Poor's and Bureau of Economic Analysis.

Figure 6.

35

35

RULE OF 20: S&P 500 P/E BASED ON TRAILING EARNINGS

vs. CPI INFLATION

30

30

25

25

Q2

20

20

15

Sep 15

10

Trailing P/E* (23.8)

10

20 Minus CPI (yearly percent change) (14.6)

5

5



0

0

35 37 39 41 43 45 47 49 51 53 55 57 59 61 63 65 67 69 71 73 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11 13 15 17 19 21 23 25

* Using quarterly average of daily data for S&P 500 price index, and 4-quarter trailing reported earnings through Q3-1988, then operating earnings. Source: Standard & Poor's and Bureau of Economic Analysis.

Page 3 / October 20, 2021 / S&P 500 Trailing P/E Ratios

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Trailing P/E

Figure 7.

35

S&P 500 P/E BASED ON TRAILING EARNINGS vs. 10-YEAR TREASURY BOND YIELD

Trailing P/E* (23.8) 30

10-Year Bond Yield (percent) (1.4) 25

20

35

30

25 Q2

20

15

15

10

10

5

5

0

Sep 0

53 55 57 59 61 63 65 67 69 71 73 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11 13 15 17 19 21 23 25

* Using quarterly average of daily data for S&P 500 price index, and 4-quarter trailing reported earnings through Q3-1988, then operating earnings. Source: Standard & Poor's and Federal Reserve Board.

Figure 8.

18

18

S&P 500 EARNINGS YIELD vs. 10-YEAR TREASURY BOND YIELD

(percent)

16

16

14

S&P 500 Earnings Yield* (4.2)

14

10-Year Bond Yield (1.4)

12

12

10

10

8

8

6

6

4

Q2

4

2

2

Sep



0

0

53 55 57 59 61 63 65 67 69 71 73 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11 13 15 17 19 21 23 25

* Using quarterly average of daily data for S&P 500 price index, and 4-quarter trailing reported earnings through Q3-1988, then operating earnings. Source: Standard & Poor's and Federal Reserve Board.

Page 4 / October 20, 2021 / S&P 500 Trailing P/E Ratios

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Trailing P/E

Figure 9.

25

S&P 500 EARNINGS YIELD & NOMINAL GDP GROWTH

Earnings Yield* (4.2) 20

Nominal GDP (yearly percent change) (16.8)

15

25

20 Q2

15

10

10

5

5

Q2

0

0

-5

-5



-10

-10

48 50 52 54 56 58 60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20 22 24 26

* S&P 500 trailing earnings divided by stock price index. Using quarterly average of daily data for S&P 500 price index, and 4-quarter trailing reported earnings through Q3-1988, then operating earnings. Source: Standard & Poor's Corporation and Bureau of Economic Analysis.

Page 5 / October 20, 2021 / S&P 500 Trailing P/E Ratios

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