S&P 100 P/E Ratios: How Low Can They Go

Below we highlight stocks in the S&P 100 (what once were considered blue chips) with the lowest estimated P/E ratios based on earnings expectations for the next four quarters.  Even if earnings came in it at half of expectations for these companies, their valuations would still be attractive in a normal market environment.  But because there is so much uncertainty about the future of these stocks and the US economy as a whole, investors aren't taking any chances.  While some of these companies might not make it, there are no doubt some great bargains in the stocks that do make it through these tough times.

 

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Comments

[JohnT]

I like WMB. But who knows about natural gas.

[JohnT]

I like WMB. But who knows about natural gas.

[JohnT]

I like WMB.

[Ben Esposito]

http://seekingalpha.com/article/38686-s-p-500-performance-and-the-nahb-home-builder-index-how-correlated

[Loob]

try this analysis against trough earnings...that means at the historical bottom of a cycle.

forward EPS means nothing in this environment folks

[Penguin]

In the last 100 years, the US stock market went through four secular bull markets, three secular range bound markets and one secular bear market. In addition, we are currently in the fourth secular range bound market. I noted, in the parenthesis, the P/E ratio from which the corresponding market has begun its run.

(1906-1924) Secular range bound (16)
(1924-1929) Secular bull (11)
(1929-1932) Secular bear (19)
(1932-1937) Secular bull (13)
(1937-1950) Secular range bound (19)
(1950-1966) Secular bull (7)
(1966-1982) Secular range bound (19)
(1982-2000) Secular bull (9)
(2000-2008) Secular range bound (33)

Historically, secular bull markets start from relatively low P/E levels. How does today's P/E stack up against this record? Well, we are currently at 15. Consider that projections for future expected earnings are coming down, which would consequently have a negative effect on the P/E (pushing it higher). Therefore, as earnings come down, optimisms build into the prices should come down even faster in order to bring us to the historical levels of a potential secular bull start. Judging by where we are right now in terms of P/E and earnings direction, it does not look like a secular bull is coming any time soon...

http://penguinsgoldenegg.blogspot.com/