Stock Market Briefing: Selected P/E Ratios

Yardeni Research, Inc.

September 24, 2021

Dr. Edward Yardeni 516-972-7683 [email protected]

Joe Abbott 732-497-5306 [email protected]

Mali Quintana 480-664-1333 [email protected]

Please visit our sites at www.yardeni.com blog.yardeni.com

thinking outside the box Table Of Contents TableTable OfOf ContentsContents

Median Forward P/E: S&P 500 4 Forward P/E: Russell 2000 5 P/E & PEG: S&P 500 6 Trailing P/E 7 P/E 8-9 Forward P/E: Growth vs Value 10-11 Miscellaneous 12-16

September 24, 2021 / Stock Market Briefing: Selected P/E Ratios Yardeni Research, Inc. www.yardeni.com Figure 1. 30 30

28 FORWARD P/E RATIOS FOR S&P INDEXES* 28 (daily) 26 26

24 24

22 S&P 500 LargeCap (20.7) 22 9/17 20 20

18 18

16 16

14 14

12 12

10 10

8 8 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

24 24

22 22

20 S&P 400 MidCap (16.3) 20

18 18

16 9/17 16

14 14

12 12

10 10

8 8 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

28 28

26 26

24 24 S&P 600 SmallCap (15.5) 22 22

20 20

18 18

16 16 9/17 14 14

12 12

10 10 yardeni.com 8 8 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

* Price divided by 52-week forward consensus expected operating earnings per share. Note: Shaded red areas are S&P 500 bear market declines of 20% or more. Blue shaded areas are correction declines of 10% to less than 20%. Yellow areas are bull markets. Source: I/B/E/S data by Refinitiv and Standard & Poor’s.

Page 1 / September 24, 2021 / Stock Market Briefing: Selected P/E Ratios Yardeni Research, Inc. www.yardeni.com Figure 2. 32 32 FORWARD P/E RATIOS FOR S&P 500 INDEXES* (weekly) 28 28

24 24

S&P 500 LargeCap (20.6) 9/17 20 20

16 16

12 12

8 8 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

24 24

20 S&P 400 MidCap (16.3) 20

16 9/17 16

12 12

8 8 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

28 28

24 24 S&P 600 SmallCap (15.4)

20 20

16 16 9/17

12 12

yardeni.com 8 8 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 * Weekly stock price index divided by 52-week forward consensus expected operating earnings per share Note: Shaded red areas are S&P 500 bear market declines of 20% or more. Yellow areas show bull markets. Source: I/B/E/S data by Refinitiv and Standard & Poor’s.

Page 2 / September 24, 2021 / Stock Market Briefing: Selected P/E Ratios Yardeni Research, Inc. www.yardeni.com Figure 3. 28 28 FORWARD P/E RATIOS FOR S&P STOCK PRICE INDEXES* 26 (daily) 26

24 24 S&P Forward P/Es 22 S&P 500 (20.7) 22 S&P 400 (16.4) 9/24 20 S&P 600 (15.6) 20

18 18

16 16

14 14

12 12

10 10

yardeni.com 8 8 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

* Daily stock price index divided by 52-week forward consensus expected operating earnings per share. Source: Standard & Poor’s and I/B/E/S data by Refinitiv.

Figure 4. 30 30 FORWARD P/E RATIOS FOR S&P INDEXES* 28 (weekly) 28

26 26

24 24

22 22 9/17 20 20

18 18

16 16

14 14

12 S&P 500 LargeCap (20.6) 12 S&P 400 MidCap (16.3) 10 S&P 600 SmallCap (15.4) 10 yardeni.com 8 8 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

* Price divided by 52-week forward consensus expected operating earnings per share. Note: Shaded red areas are S&P 500 bear market declines of 20% or more. Yellow areas show bull markets. Source: I/B/E/S data by Refinitiv.

Page 3 / September 24, 2021 / Stock Market Briefing: Selected P/E Ratios Yardeni Research, Inc. www.yardeni.com Median Forward P/E: S&P 500 Figure 5. 24 24 FORWARD P/E RATIO FOR S&P 500 (MEDIAN) 22 22

20 20 Aug

18 18

16 16

14 14

12 12

10 10 S&P 500 Median Forward P/E (19.3) 8 8

yardeni.com 6 6 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20 22 24

Note: Shaded red areas are S&P 500 bear market declines of 20% or more. Yellow areas show bull markets. Source: I/B/E/S data by Refinitiv.

Figure 6. 30 30 FORWARD P/E RATIOS FOR S&P 500 (ACTUAL & MEDIAN)

25 25

Aug 20 20

15 15

10 10 S&P 500 Forward P/E Ratio* (21.3) S&P 500 Median Forward P/E (19.3)

5 5 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20 22 24

* Average weekly price divided by 52-week forward consensus expected operating earnings per share. Note: Shaded red areas are S&P 500 bear market declines of 20% or more. Yellow areas show bull markets. Source: I/B/E/S data by Refinitiv.

Page 4 / September 24, 2021 / Stock Market Briefing: Selected P/E Ratios Yardeni Research, Inc. www.yardeni.com Forward P/E: Russell 2000 Figure 7. 70 70 FORWARD P/E RATIOS FOR RUSSELL 2000* (weekly) P/E capped at 60 due to extreme values. 60 60 Russell 2000 (26.8) Russell 2000 Growth (47.1) Russell 2000 Value (18.3) 50 50

40 40

30 30 9/16

20 20

yardeni.com 10 10 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

* Price divided by 12-month (52-week) forward consensus expected operating earnings per share. Monthly data through December 2005, weekly thereafter. Source: I/B/E/S data by Refinitiv.

Figure 8. 40 40 FORWARD P/E RATIOS FOR US SMALLCAP* P/E capped at 35 due to extreme values. 35 35

Russell 2000 (26.8) S&P 600 SmallCap (15.4) 30 30

9/16 25 25

20 20

15 15

yardeni.com 10 10 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

* Price divided by 12-month (52-week) forward consensus expected operating earnings per share. Monthly data through December 2005, weekly thereafter. Source: I/B/E/S data by Refinitiv.

Page 5 / September 24, 2021 / Stock Market Briefing: Selected P/E Ratios Yardeni Research, Inc. www.yardeni.com P/E & PEG: S&P 500 Figure 9. 30 30 S&P 500 P/E Latest (20.9) 28 (using reported trailing earnings 1960-1978 forward earnings* 1979-present) 28 26 26

24 24

22 22 9/16 20 20

18 18

16 16

14 14

12 12

10 10

8 8

6 6 yardeni.com 4 4 60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20 22 24 26

* Time-weighted average of consensus estimates of S&P 500 operating earnings per share for current year and next year. Monthly from January 1979 through April 1994, then weekly. Note: Shaded areas are recessions according to the National Bureau of Economic Research. Source: I/B/E/S data by Refinitiv and Standard & Poor’s.

Figure 10. 2.50 2.50 S&P 500 VALUATION: PEG RATIO

2.25 2.25

2.00 2.00

PEG Ratio* (1.0) 1.75 1.75

1.50 1.50

1.25 Dec 1.25

1.00 1.00 9/16

yardeni.com .75 .75 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

* Forward P/E divided by LTEG, which is 5-year forward consensus expected annual earnings growth. Monthly through 2005, then weekly. Note: Shaded red areas are S&P 500 bear market declines of 20% or more. Yellow areas show bull markets. Source: I/B/E/S data by Refinitiv .

Page 6 / September 24, 2021 / Stock Market Briefing: Selected P/E Ratios Yardeni Research, Inc. www.yardeni.com Trailing P/E Figure 11. 50 50 P/E RATIO FOR S&P 500 Capped at 45 due to extreme values (Using Trailing Reported Earnings)*

40 40

30 30

20 20

10 10

0 0 35 37 39 41 43 45 47 49 51 53 55 57 59 61 63 65 67 69 71 73 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11 13 15 17 19 21 23 25 27

* Using 4-quarter trailing reported earnings. Note: Shaded red areas are S&P 500 bear market declines of 20% or more. Yellow areas show bull markets. Source: Standard & Poor’s.

Figure 12. 32 32 S&P 500 P/E RATIOS S&P 500 P/Es Trailing (using operating earnings)* (23.8) 28 28 Forward** (21.1)

24 Q2 24

Sep 20 20

16 16

12 12

yardeni.com 8 8 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

* Using quarterly average of daily data for S&P 500 price index, and 4-quarter trailing operating earnings (I/B/E/S data). ** S&P 500 stock price index divided by S&P 500 12-month forward analysts’ consensus expected operating earnings per share. Note: Shaded red areas are S&P 500 bear market declines of 20% or more. Yellow areas show bull markets. Source: I/B/E/S data by Refinitiv and Standard & Poor’s.

Page 7 / September 24, 2021 / Stock Market Briefing: Selected P/E Ratios Yardeni Research, Inc. www.yardeni.com P/E Figure 13. 60 60 US EQUITY MARKET CAPITALIZATION: NONFINANCIAL CORPORATIONS (as a ratio of NFC after-tax profits from current production*)

50 50

40 40

Q2 30 30

20 20

10 10

0 0 60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20 22 24

* Including IVA and CCadj. These two adjustments restate the historical cost basis used in profits tax accounting for inventory withdrawals and depreciation to the current cost measures used in GDP. Note: Shaded red areas are S&P 500 bear market declines of 20% or more. Yellow areas show bull markets. Source: Haver Analytics.

Figure 14. 40 40 US EQUITY MARKET CAPITALIZATION EXCLUDING FOREIGN ISSUES (as a ratio of NFC after-tax profits from current production*) 35 35

30 30 As a ratio of: After-Tax Profits from Current Production* (Avg = 13.8) Q2 25 Corporate Cash Flow** (Avg = 9.1) 25

Q2 20 20

15 15

10 10

5 5

0 0 60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20 22 24

* Including IVA and CCadj. These two adjustments restate the historical cost basis used in profits tax accounting for inventory withdrawals and depreciation to the current cost measures used in GDP. ** After-tax operating retained earnings plus tax-return-based depreciation. Note: Shaded red areas are S&P 500 bear market declines of 20% or more. Yellow areas show bull markets. Source: Thomson Reuters I/B/E/S, Bureau of Economic Analysis, Federal Reserve Board Flow of Funds Accounts, and Standard & Poor’s.

Page 8 / September 24, 2021 / Stock Market Briefing: Selected P/E Ratios Yardeni Research, Inc. www.yardeni.com P/E Figure 15. 55 55 FORWARD P/E RATIOS FOR S&P 500 STOCK PRICE INDEX* (weekly)

45 45

S&P 500 (21.1) 35 S&P 500 Technology (26.2) 35

25 25

9/16

15 15

yardeni.com 5 5 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

* Stock price index divided by forward consensus expected operating earnings per share. Monthly through December 2005, then weekly. Note: Shaded red areas are S&P 500 bear market declines of 20% or more. Yellow areas show bull markets. Source: Standard & Poor’s.

Figure 16. 30 30 FORWARD P/E RATIOS FOR S&P 500*

25 25

S&P 500 (21.1) 9/16 20 S&P 500 Ex Technology (19.5) 20

15 15

10 10

yardeni.com 5 5 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

Page 9 / September 24, 2021 / Stock Market Briefing: Selected P/E Ratios Yardeni Research, Inc. www.yardeni.com Forward P/E: Growth vs Value Figure 17. 50 50 S&P 500 FORWARD P/E RATIOS FOR GROWTH & VALUE* (weekly) 45 45

40 40

35 35 Growth (28.2) 30 Value (16.2) 30 9/16

25 25

20 20

15 15

10 10

yardeni.com 5 5 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

* Price divided by 12-month (52-week) forward consensus expected operating earnings per share. Monthly data through December 2005, weekly thereafter. Note: Shaded red areas are S&P 500 bear market declines of 20% or more. Yellow areas are bull markets. Source: I/B/E/S data by Refinitiv .

Figure 18. 4.00 4.00 PEG RATIOS FOR S&P 500 CITIGROUP GROWTH vs VALUE* 3.75 3.75

3.50 3.50

3.25 3.25

3.00 Growth (1.25) 3.00 Value (0.75) 2.75 2.75

2.50 2.50

2.25 2.25

2.00 2.00

1.75 1.75

1.50 1.50

1.25 9/16 1.25

1.00 1.00

.75 .75 yardeni.com .50 .50 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

* Using 5-year forward consensus expected earnings growth and price divided by 12-month (52-week) forward consensus expected operating earnings per share. Monthly data through December 2005, weekly thereafter. Note: Shaded red areas are S&P 500 bear market declines of 20% or more. Yellow areas are bull markets. Source: I/B/E/S data by Refinitiv.

Page 10 / September 24, 2021 / Stock Market Briefing: Selected P/E Ratios Yardeni Research, Inc. www.yardeni.com Forward P/E: Growth vs Value Figure 19. 65 65 S&P 500 FORWARD P/E: PERCENTAGE OF COMPANIES ABOVE 20 AND BELOW 10 60 (weekly) 60 55 55

50 50 9/17 45 % above 20 P/E (47.2) 45 % below 10 P/E (10.9) 40 40

35 35

30 30

25 25

20 20

15 15

10 10

5 5 yardeni.com 0 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Source: Yardeni Research using I/B/E/S data by Refinitiv.

Page 11 / September 24, 2021 / Stock Market Briefing: Selected P/E Ratios Yardeni Research, Inc. www.yardeni.com Miscellaneous Figure 20. 10 10 FORWARD P/E RATIOS FOR S&P INDEXES* (weekly)

5 5 9/10 S&P 500 LargeCap Minus S&P 400 MidCap (4.4) S&P 600 SmallCap (5.4)

0 0

yardeni.com -5 -5 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

Figure 21. 30 30 S&P 500 FORWARD P/E RATIOS FOR GROWTH & VALUE* (weekly) 25 25

20 20

Growth Minus Value (12.2) 15 15

9/9

10 10

5 5

0 0

yardeni.com -5 -5 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

Page 12 / September 24, 2021 / Stock Market Briefing: Selected P/E Ratios Yardeni Research, Inc. www.yardeni.com Miscellaneous Figure 22. 28 28 FORWARD P/E RATIOS FOR US LARGECAP* 26 (weekly) 26

24 24 Russell 1000 (21.8) 22 S&P 500 (20.8) 9/9 22

20 20

18 18

16 16

14 14

12 12

10 10

yardeni.com 8 8 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

* Price divided by 12-month forward consensus expected operating earnings per share. Note: Shaded red areas are S&P 500 bear market declines of 20% or more. Yellow areas show bull markets. Source: I/B/E/S data by Refinitiv.

Figure 23. 1.02 1.02 US LARGECAP FORWARD EARNINGS* 1.01 1.01

1.00 1.00 Forward Earnings Ratio S&P 500 LargeCap/Russell 1000 (0.96) .99 .99

.98 .98

.97 .97

.96 9/9 .96

.95 .95

.94 .94

yardeni.com .93 .93 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

* Price divided by 12-month forward consensus expected operating earnings per share. Source: I/B/E/S data by Refinitiv.

Page 13 / September 24, 2021 / Stock Market Briefing: Selected P/E Ratios Yardeni Research, Inc. www.yardeni.com Miscellaneous Figure 24. 40 40 FORWARD P/E RATIOS FOR US SMALLCAP* P/E capped at 35 due to extreme values. 35 35

Russell 2000 (27.0) S&P 600 SmallCap (15.4) 30 30

9/9

25 25

20 20

15 15

yardeni.com 10 10 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

* Price divided by 12-month (52-week) forward consensus expected operating earnings per share. Monthly data through December 2005, weekly thereafter. Note: Shaded red areas are S&P 500 bear market declines of 20% or more. Yellow areas show bull markets. Source: I/B/E/S data by Refinitiv.

Figure 25. 22 22 SPREAD IN FORWARD P/E RATIOS: 20 RUSSELL 2000 MINUS S&P 600* P/E spread capped at 20 20 due to extreme values. 18 18

16 16

14 14

12 12 Russell 2000 minus 9/9 10 S&P 600 SmallCap (10.9) 10

8 8

6 6

4 4

2 2

yardeni.com 0 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

* Price divided by 12-month (52-week) forward consensus expected operating earnings per share. Monthly data through December 2005, weekly thereafter. Source: I/B/E/S data by Refinitiv.

Page 14 / September 24, 2021 / Stock Market Briefing: Selected P/E Ratios Yardeni Research, Inc. www.yardeni.com Miscellaneous Figure 26. .50 .50 US SMALLCAP FORWARD EARNINGS*

.45 .45

Forward Earnings Ratio 9/9 S&P 600 SmallCap/Russell 2000 (0.42) .40 .40

.35 .35

.30 .30

.25 .25

yardeni.com .20 .20 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

* Price divided by 12-month forward consensus expected operating earnings per share. Source: I/B/E/S data by Refinitiv.

Figure 27. 26 26 FORWARD P/E RATIOS FOR US MIDCAP* 24 24

22 22 Russell MidCap (21.4) 9/9 S&P 400 MidCap (16.4) 20 20

18 18

16 16

14 14

12 12

10 10

yardeni.com 8 8 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

Page 15 / September 24, 2021 / Stock Market Briefing: Selected P/E Ratios Yardeni Research, Inc. www.yardeni.com Miscellaneous Figure 28. .44 .44 US MIDCAP FORWARD EARNINGS* .43 .43

.42 9/9 .42

.41 Forward Earnings Ratio .41 S&P 400 MidCap/Russell MidCap (0.42) .40 .40

.39 .39

.38 .38

.37 .37

.36 .36

.35 .35

.34 .34

.33 .33 yardeni.com .32 .32 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

* Price divided by 12-month forward consensus expected operating earnings per share. Source: I/B/E/S data by Refinitiv.

Page 16 / September 24, 2021 / Stock Market Briefing: Selected P/E Ratios Yardeni Research, Inc. www.yardeni.com Copyright (c) Yardeni Research, Inc. 2021. All rights reserved. The information contained herein has been obtained from sources believed to be reliable, but is not necessarily complete and its accuracy cannot be guaranteed. No representation or warranty, express or implied, is made as to the fairness, accuracy, completeness, or correctness of the information and opinions contained herein. The views and the other information provided are subject to change without notice. All reports and podcasts posted on www.yardeni.com, blog.yardeni.comhttp://blog.yardeni.com, and YRI’s Apps are issued without regard to the specific investment objectives, financial situation, or particular needs of any specific recipient and are not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. Past performance is not necessarily a guide to future results. Company fundamentals and earnings may be mentioned occasionally, but should not be construed as a recommendation to buy, sell, or hold the company’s stock. Predictions, forecasts, and estimates for any and all markets should not be construed as recommendations to buy, sell, or hold any security--including mutual funds, futures contracts, and exchange traded funds, or any similar instruments.

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