S&P 500’s P/E Ratio Close to 3.5-Year High

The Price/Earnings Ratio for the S&P 500, based on trailing earnings, recently topped 17. It’s very close to reaching its highest point since May 2010.

Just over two years ago, on October 3, 2011, the S&P 500’s P/E Ratio bottomed out at 11.61. That was the lowest ratio in 22 years. Going by Friday’s close, the S&P 500 has advanced 58.7%. But 45.6% of that is solely down to multiple expansion. Earnings are up only 9.4%.

This is a bit misleading because we’re working off a very low P/E Ratio. I think it’s more accurate to say that the P/E Ratio went from being very low back to a more normal range.


Posted by on October 21st, 2013 at 1:04 pm

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