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

S&P 500 Trailing P/E Ratios

Yardeni Research, Inc.

October 31, 2023

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 31, 2023 / S&P 500 Trailing P/E Ratios

Yardeni Research, Inc.



Figure 1.

32

S&P 500 P/E RATIOS

28

24

20

16

Trailing P/E

S&P 500 P/Es Trailing (using operating earnings)* (20.2) Forward** (18.1)

32

28

24

Q2

20

Oct

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 25

* 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.

Note: Shaded red areas are 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.

Figure 2.

50

S&P 500 P/E RATIOS

45

50

Capped at 45 due to extreme values

45

40

40

35

S&P 500 P/Es

35

Trailing (using reported earnings)* (23.2)

Forward** (18.1)

30

30

25

25

Q2

20

20

Oct

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. Note: Shaded red areas are 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 31, 2023 / S&P 500 Trailing P/E Ratios

Yardeni Research, Inc.



Trailing P/E

Figure 3.

50

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

50 Capped at 45 due to extreme values

40

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 27

* Using 4-quarter trailing reported earnings. Note: Shaded red areas are S&P 500 bear market declines of 20% or more. Yellow areas show bull markets. Source: Standard & Poor's.

Figure 4. The long view shows that trailing P/E not useful in market timing.

35

35

S&P 500 P/E BASED ON TRAILING EARNINGS*

Capped at 30 due to extreme values

30

30

25

25

Q2 Average = 16.1

20

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 monthly data for S&P 500 price index and 4-quarter trailing reported earnings. Note: Shaded red areas are S&P 500 bear market declines of 20% or more. Yellow areas show bull markets. Source: Standard & Poor's.

Page 2 / October 31, 2023 / S&P 500 Trailing P/E Ratios

Yardeni Research, Inc.



Trailing P/E

Figure 5.

35

35

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

30

Trailing P/E* (20.2)

30

CPI

(yearly percent change) (3.7)

25

25

20

Q2 20

15

15

10

10

5

5

Sep

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 27

* Using quarterly average of daily data for S&P 500 price index, and 4-quarter trailing reported earnings through Q4-1988, then operating earnings. Source: Standard & Poor's and Bureau of Economic Analysis. Note: Shaded red areas are S&P 500 bear market declines of 20% or more. Yellow areas show bull markets.

Figure 6.

35

35

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

30

30

25

25

20

Q2 20

Sep

15

15

10

Trailing P/E* (20.2)

10

20 Minus CPI (yearly percent change) (16.3)

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 27

* 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. Note: Shaded red areas are S&P 500 bear market declines of 20% or more. Yellow areas show bull markets.

Page 3 / October 31, 2023 / S&P 500 Trailing P/E Ratios

Yardeni Research, Inc.



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