SPX PE/EARNINGS NUMBERS

I have mentioned a number of times that stocks are cheap especially when compared to instruments like the 10 year Bond. Hopefully, the following numbers will shed more light as they are from the S&P website and updated last week:

SPX earnings- 2004- $67.67

2005- $76.44

2006- $87.72

2007- $88.94 Estimated

2008-$102.78 Estimated

PE on SPX -end of year close:

2004 17.91 1,211.92 close;

2005 16.33 1,248.29 close;

2006 16.17 1,418.3 close;

2007E 16.7 1,485E

2008E 14.5 1,485E

Ten year Bond Rate December 31:

2004 4.22%

2005 4.395%

2006 4.71%

2007 4.08%

2008 ?

Earnings for 2008 clearly no sure thing - take $5 or 7$ from the $103 estimate, the P/E is still pretty low.

The estimates seem a bit optimistic in the consumer discretionary (+25.4%), financials (15.5%) and Telecom service sectors (+32.7%) so a $5/7 haircut is probably more realistic.

All the numbers on the SPX earnings and forecasts available here.