S&P 500’s P/E Ratio Hits Lowest Level in 19 Months

Here’s a look at the S&P 500 (black line, left scale) along with its operating earnings (yellow line, right scale).

The two lines are scaled at a ratio of 16 to 1 so when the lines cross, the S&P’s price/earnings ratio is exactly 16. The future earnings is the consensus from analysts.
The current P/E Ratio is 14.49 which is the lowest level for the index since November 2008. To be fair, the market’s real P/E Ratio was a lot lower then since the earnings line was devastated by losses at AIG.
Here’s the S&P’s P/E Ratio going back to the 1980s.

We’re not too far from hitting 20-year lows.

Posted by Eddy Elfenbein on June 29th, 2010 at 11:19 pm

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