Following on from yesterday’s How Low Can We Go, I thought it would be good to look at the S&P earnings data. The S&P data shows TTM reported earnings have been falling for a year after peaking in Q2 2007 at $84.95. Earnings are down 29% to $60.39 as of Q1 2008. As if that is not bad enough, estimates for Q2 08 predict earnings hitting a low of $51.68 before improving slightly in Q3 and improving thereafter.

A rosier view is gained by concentrating on the quarterly earnings rather than TTM. Quarterly data show earnings hit their low in Q4 2007 and have been improving since.

So what is the current P/E of the S&P 500?

What has caused the drop in earnings?

To get a view on that we need to look at the earnings per sector. Before we do, let’s have a show of hands by those who think the majority of the fall is the result of the financial sector. Anyone not put their hand up?

Financials it is. The only other sector that has shown a meaningful decline is consumer discretionary and like financials, estimates for the next two quarters are up. How about that energy sector? It is now contributing more than twice the earnings of the second highest sector. How long is that trend going to last?

Data

• Robert Shiller’s Data http://www.econ.yale.edu/~shiller/data/ie_data.htm
• S&P Data in Excel http://www2.standardandpoors.com/spf/xls/index/SP500EPSEST.XLS
• Damodaran’s earnings and dividend yield view. http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/spearn.htm
• S&P 500 Earnings per Sector http://www2.standardandpoors.com/spf/xls/index/iee500_gics.xls

Related posts:

1. S&P500 Earnings Update and Sector Focus
2. S&P 500 Sector Earnings
3. Sector Rotation Plus S&P Responds to Jeremy Siegel
4. S&P 500 Operating Earnings – What Are You Focusing On?
5. Thomas Nogales November Letter – Hussman plus S&P500