Wall Street’s Consensus

Here’s the S&P 500 (black line) along with its trailing earnings (blue line). The two lines are scaled at a ratio of 18 to 1. That means that whenever the lines cross, the P/E Ratio is exactly 18.

The future part of the earnings line is Wall Street’s consensus.

A few things to mention. I don’t mean to imply 18 is the correct P/E ratio. It just makes the chart look the most readable.

Wall Street sees year-over-year earnings bottoming in Q4, then rising sharply in 2021.

I’m also very skeptical of earnings forecasts that far out in the future, but it’s interesting to see what other people think.

Posted by on May 28th, 2020 at 1:25 pm


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