S&P 500 Earnings for P/E Calculations

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hayesfj
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S&P 500 Earnings for P/E Calculations

Post by hayesfj »

I am trying to find a definitive source of the S&P 500 trailing twelve month earnings. I am looking at multiple sources and they are all reporting significantly different numbers. For example, for FY 2019:

https://www.yardeni.com/pub/yriearningsforecast.pdf shows $162.97

https://www.spglobal.com/spdji/en/docum ... s-est.xlsx shows Operating Earnings of $157.12 and As Reported of $139.47

https://www.multpl.com/s-p-500-earnings/table/by-year shows $142.75 (in 2021 dollars)

https://www.officialdata.org/us-economy ... 0-earnings shows $133.06

This should not be this hard, or am I missing something? Which one is correct, and why are the others incorrect?

Thanks for any guidance.
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patrick013
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Re: S&P 500 Earnings for P/E Calculations

Post by patrick013 »

$139.47 from S&P

As reported is fully diluted according to US Accounting
standards.
age in bonds, buy-and-hold, 10 year business cycle
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hayesfj
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Re: S&P 500 Earnings for P/E Calculations

Post by hayesfj »

Thank you, Patrick013. Are you using a source other than the S&P source I quoted in the original post? Any view why the other sites quote different numbers?
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JoMoney
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Re: S&P 500 Earnings for P/E Calculations

Post by JoMoney »

There are lots of different ways of aggregating earnings , or even aggregating the P/E's of various stocks, in a portfolio... Including to how to handle extremely low or negative earnings for a company, which leads to lots of different numbers that are all correct but depend on the specific aggregation measure one chooses to use.
There are also differences for whether you look at trailing earnings, or forward earnings projections, and whether or not you have the most recent quarters earnings in your calculation.

The sources I would use for the S&P 500 P/E would be either the WSJ
https://www.wsj.com/market-data/stocks/peyields

Or the Excel Spreadsheet put out by S&P
https://www.spglobal.com/spdji/en/docum ... s-est.xlsx

Or any of the many charts put out by Yardeni Research
https://www.yardeni.com/
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham
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hayesfj
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Re: S&P 500 Earnings for P/E Calculations

Post by hayesfj »

Thank you, JoMoney. My issue is that S&P spreadsheet source quotes a different number for 2019 TTM Earnings than Yardeni Research does (source also in my original post). Assuming they are both credible sources, how do I reconcile the differences?
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JoMoney
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Re: S&P 500 Earnings for P/E Calculations

Post by JoMoney »

hayesfj wrote: Sat Apr 17, 2021 10:23 am Thank you, JoMoney. My issue is that S&P spreadsheet source quotes a different number for 2019 TTM Earnings than Yardeni Research does (source also in my original post). Assuming they are both credible sources, how do I reconcile the differences?
I see now, interesting.. Yardeni does quote his earnings source as being " I/B/E/S data by Refinitiv "
In other charts he does show the discrepancy between sources
Image
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham
TJSI
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Re: S&P 500 Earnings for P/E Calculations

Post by TJSI »

I would use the S&P published numbers. From time to time, they update (correct) their numbers. I believe S&P uses the 10K statements to generate their numbers. And from time to time, companies will update(correct) their numbers which results in S&P changing their numbers. Companies which use the S&P numbers probably don't update their numbers in a timely fashion or never they update them.
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JoMoney
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Re: S&P 500 Earnings for P/E Calculations

Post by JoMoney »

FWIW, my guess is that the I/B/E/S calculations is a weighted average of the individual stocks/business earnings.
Whereas the S&P index earnings calculation aggregates all the earnings of the all the companies as if they're one giant stock.

It makes a big difference in the net result if there is a company (or a few of them), that might make up a relatively small portion of the portfolio of individual stocks, that have massive losses. If some bank loses -$100 billion dollars, but only makes up 1% of your stock portfolio, some might see it as better to only count 1% of that loss into the overall earnings, whereas the S&P methodology would allow the loss to detract from earnings made by other stocks/businesses regardless of it's weighting in the portfolio. The Index / S&P method of aggregation might make more sense when looking at an entire economy and it's net effect on the economy as a whole, but less representative of a individual investment portfolios results where the losses of one company don't necessarily have an impact on another.

Prof. Jeremy Siegel wrote several articles arguing that "S&P's earnings are wrong" trying to explain the issues if you're looking at that methodology in a period where there were massive losses from banks during the financial crisis.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham
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hayesfj
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Re: S&P 500 Earnings for P/E Calculations

Post by hayesfj »

Thank you for the additional chart JoMoney. So Dr. Yardeni is using Operating Earnings as the basis for P/E and not As Reported. Given a 3257.85 2019 Year End S&P 500, the difference between the S&P of $157.12 and Yardeni Research of $162.97 is the difference between a 20.73 P/E and a 19.99 P/E. Probably not meaningful in the grand scheme of things.
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patrick013
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Re: S&P 500 Earnings for P/E Calculations

Post by patrick013 »

hayesfj wrote: Sat Apr 17, 2021 10:00 am Thank you, Patrick013. Are you using a source other than the S&P source I quoted in the original post? Any view why the other sites quote different numbers?
S&P provided totals should be actual accounting data.

I/B/E/S is an estimate service and others are making adjustment for
real dollars.

Also operated earnings is usually higher. As reported includes non-operating
items.
age in bonds, buy-and-hold, 10 year business cycle
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