Monday, April 5, 2010

S&P 500 Price/Earnings Ratio

The information about the S&P 500 price to earnings ratio below is from a short article by Carl Swenlin. His article has another chart that shows the current S&P value compared with hypothetical values based on the reported trailing earnings and multiples in the undervalued, fair value and overvalued ranges.  This restores my confidence in my process. I have been unable to replicate the claims by some who insist that the S&P is trading at a P/E in the upper atmosphere, like 80-120 times trailing, not to be confused with average earnings per share as shown below. This just had to be saved for my future reference. Thanks Carl.