tcal

Fear, Panic & Opportunity in the Markets

What is the source/methodology behind the “consensus operating earnings estimates for S&P 500 earnings” of $104? Is operating earnings the best figure to use? Is $104 a reasonable estimate?

FYI:
Data available at Robert Schiller’s web-site shows approximately $60 in trailing actual earnings.
www.econ.yale.edu/~shiller/data/ie_data...


Standard & Poors shows: $69 in actual trailing 4 qtr. (9/07-6/08) operating earnings, a $68 forecast for 2009 “top-down” operating earnings, and $104 for 2009 “bottoms-up” estimates.
www2.standardandpoors....

Given that actual earnings over the last 4-quarters are somewhere between $60 and $69, it seems to me that the $68 estimate is much more reasonable then the $104 estimate.

FYI, Schiller likes to use the trailing ten-year earnings when he calculates the S&P 500’s PE. Trailing ten-year S&P 500 earnings are near $60, putting the S&P 500 PE at ~ 16. This puts today’s PE near the average PE over the previous 130 years.

I highly suggest reading Schiller’s “Irrational exuberance”, and using the data found at:
www.econ.yale.edu/~shiller/data/ie_data...