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According to the latest numbers I have from S&P, fourth-quarter S&P 500 earnings reports are 85% in. The number for operating earnings looks to be $5.77 which is down from $15.22 from the fourth quarter of 2007. The “as reported” earnings negative.

I doubt operating earnings will crack $50 for all of 2009. Here’s a look at the S&P 500 and operating earnings for the past few years.

The black line is the S&P 500 and it follows the left scale. The gold line is operating earnings and it follows the right scale. The two lines are scaled at a ratio of 16 to 1 so when the lines cross, the P/E Ratio is exactly 16.

What's interesting is that the earnings multiple hasn't changed much over the past few years. You can also see how much of 90s rally was due to multiple expansion.

Posted by edelfenbein at February 17, 2009 2:15 PM