Even as stock prices fell, the P/E ratio's earnings component held up reasonably well. Some investors are preparing for more stock market volatility as a result of Wall Street analysts reducing earnings projections faster than usual, according to a media report. Rob Haworth, senior investment strategist at U.S. Bank, stated, "We find it difficult to claim that the market is undervalued." "Earnings resetting has not yet come to an end."
According to FactSet, the bottoms-up earnings-per-share estimate for the third quarter, which is an average of consensus forecasts for individual S&P 500 firms, decreased by 2.5% in July. According to the Wall Street Journal, that is a greater dip than the historical norm and the largest decrease during the first month of a quarter in more than two years.
The market's valuation is also once again rising. The S&P 500 is currently trading at 17.5 times projected earnings for the next 12 months, up from 15.3 in mid-June and slightly over its 10-year average, after falling from stratospheric levels at the start of the year. Ronald Saba, senior portfolio manager at Horizon Investments, stated, "It's not only fundamentals or growth, but what you're paying for things is ultimately what matters." According to the Wall Street Journal, "values are going to matter more and more, especially in a declining growth scenario."
According to FactSet, the bottoms-up earnings-per-share estimate for the third quarter, which is an average of consensus forecasts for individual S&P 500 firms, decreased by 2.5% in July. According to the Wall Street Journal, that is a greater dip than the historical norm and the largest decrease during the first month of a quarter in more than two years.
The market's valuation is also once again rising. The S&P 500 is currently trading at 17.5 times projected earnings for the next 12 months, up from 15.3 in mid-June and slightly over its 10-year average, after falling from stratospheric levels at the start of the year. Ronald Saba, senior portfolio manager at Horizon Investments, stated, "It's not only fundamentals or growth, but what you're paying for things is ultimately what matters." According to the Wall Street Journal, "values are going to matter more and more, especially in a declining growth scenario."
