Here are the numbers I have for S&P 500 “As Reported” Earnings (please verify independently):
By Daniel at 2 January, 2010, 1:34 am
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2008 Q4: -23.25
2009 Q1: +7.52
2009 Q2: +13.51
2009 Q3: +14.91 (with 87% reported)
Adding in that large negative number from 2008 Q4 pushes earnings down a lot when computing PE from trailing 4 quarters. That number will go away once 2009 Q4 is reported.
Suppose estimate 2009 Q4 as average of 2nd and 3rd quarters 2009. That gives 14.21. Earnings for 2009 would then be 50.15.
Current SPX price = 1115.
PE = 1115 / 50.15 = 22.
That PE is high enough for the market to go down, but not high enough that the market has to go down. Of course, a lot depends on how earnings go from here.
Above SP 500 PE implies an earnings yield of 1/22 = 4.5%
Estimating SP 500 dividend yield from John–Galt’s Dow number gives 2.6%. Total SP 500 yield = 7.1%
Current yield on 20-year treasury = 4.58%
By that measure, stocks a better yield by 2.52%
But, where are earnings going and where are treasury yields going?
- Now-n-Then
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