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Highest Forward 12-Month P/E Ratio for S&P 500 since 2004

By John Butters, Senior Earnings Analyst
Feb 20, 2015

The forward 12-month P/E ratio for the S&P 500 now stands at 17.1, based on yesterday’s closing price (2097.45) and forward 12-month EPS estimate ($122.72). Given the high values driving the “P” in the P/E ratio, how does this 17.1 P/E ratio compare to historical averages? What is driving the increase in the P/E ratio?

The current forward 12-month P/E ratio of 17.1 is now well above the three most recent historical averages: 5-year (13.6), 10-year (14.1), and 15-year (16.0). In fact, this week marked the first time the forward 12-month P/E has been equal to (or above) 17.1 since December 31, 2004. On that date, the closing price of the S&P 500 was 1211.92 and the forward 12-month EPS estimate was $70.79.

Back on December 31, the forward 12-month P/E ratio was 16.2. Since this date, the price of the S&P 500 has increased by 1.9% (to 2097.45 from 2058.90), while the forward 12-month EPS estimate has decreased by 3.3% (to $122.72 from $126.90). Thus, both the increase in the “P” and the drop in the “E” have driven the increase in the P/E ratio to 17.1 today from 16.2 at the start of the first quarter. 

It is interesting to note that despite the decline in the forward 12-month EPS estimate for the S&P 500 over the past few weeks, analysts are still projecting record-level EPS for the S&P 500 in the 2nd half of 2015. If not, the forward 12-month P/E ratio would be even higher than 17.1.  

Read more about earnings trends in this edition of FactSet Earnings Insight. Visit to launch the latest report.

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