SPY says 15.44 as of Sep 30, 2009 http://finance.yahoo.com/q?s=SPY multpl.com says 927.31/7.52=123.3125 as of June 1st, 2009 http://www.multpl.com/s-p-500-earnings/ Which one is correct? Thanks!
I believe the difference is that if you use operating earnings, you get the lower PE figure; if you include “one time charges” (i.e. writedowns) you get the higher one.
You should visit the official S&P website. There you can find the official earnings (both operating and reported) for the last 4 quarters. Also, SP issues official P/E for S&P indices, but only as of a quarter end. Cheers
Here is the S&P excel report with OE and RP and estimates. http://www2.standardandpoors.com/spf/xls/index/SP500EPSEST.XLS
Oh I see. Indeed, bchadwick is right. So which number should we use to gauge whether the market is expensive or not? The astronomically high P/E (if you believe in the 100+ reported P/E) or the “normal” P/E (if you believe in operating P/E)? Or maybe it is something in between, e.g. the 10 years average P/E used by multpl.com?
Which one to use? Basically depends on whether you think those “one time charges” are truly one-time or not. There’s another issue of figuring out over and undervaluation, which is whether the growth assumptions built into earnings are reasonable, given concerns about employment and the consumer. So you might decide that the one-time charges are indeed one-time (or that you can model them separately and add them in), but that the operating earnings assume traditional growth rates that are no longer realistic given current economic conditions. S&P 500 companies *tend* to be mature, so their growth rates aren’t supposed to be as volatile as other companies, but their growth is still related to the growth of the economy as a whole.
S&P 500 companies aggregated forward earning is about $65 to $70/share. At 1063, it’s about 15-16 PE.