S&P 500 Forward Earnings Estimates Rise 31% as Valuation Multiple Falls

Figures published Oct. 21 put the S&P 500's year-to-date rise in forward earnings estimates at 31%, ahead of the index's 13.3% gain and pointing to a lower valuation relative to projected profit. The index's forward price-to-earnings ratio fell 13.5% in the same comparison. The ratio shows how much investors pay for each dollar of expected earnings. It can decline while stock prices rise if profit expectations increase faster than prices. They put numbers on the gap between the index's gains and the increase in its forward earnings estimates. Third-quarter results offer a separate measure of profit growth.

Source: TokenPost