Sentences with phrase «peak earnings multiple»

So what does a price to peak earnings multiple above 19 mean for a buy and hold investor?

How did stocks perform if they were bought at a price to peak earnings multiple above 19?

In contrast, the much stronger 1974 period started at a price - to - peak earnings multiple of 7 (about 10 times 1972's peak earnings level).

If you look at periods where the price / peak earnings multiple was 16 or higher on the S&P 500, the final rate hike of a tightening cycle was actually associated with losses on an annualized total return basis, averaging -7.18 % over the following 6 months, -9.94 % over the following 12 months, and -5.87 % over the following 18 months.

The risks are material if this bear market was to end at the average price - to - peak earnings multiple of past recessionary troughs.

Oh, and in the two years following the end of this particular chart, the price / peak earnings multiple on the S&P 500 fell in half.

The first is the very optimistic assumption that in the decade following each starting point, the price / peak earnings multiple will move to a level of 20 (the same level seen in 1929 and other major extremes).

Assume also that by 2010, the price / peak earnings multiple simply touches its historical average of 14 (forget that the typical multiple has been less than 10 when earnings have been at the top of that peak - to - peak growth channel - let's just assume the multiple touches 14).

For example, start from the current price / peak earnings multiple of 20 and a 1.7 % dividend yield.

So what does a price to peak earnings multiple above 19 mean for a buy and hold investor?

How did stocks perform if they were bought at a price to peak earnings multiple above 19?

The following chart illustrates the current disconnect, and presents the market's price / revenue, price / book, price / dividend, and enterprise value / EBITDA multiples, scaled by their historical relationship to the S&P 500 price / peak earnings multiple.

Bill's main point here is that with the exception of the 1973 - 1974 bear market, the downturns that ended at single - digit price - to - peak earnings multiples also started at below - average multiples.

As usual, I don't place too much emphasis on this sort of forecast, but to the extent that I make any comments at all about the outlook for 2006, the bottom line is this: 1) we can't rule out modest potential for stock appreciation, which would require the maintenance or expansion of already high price / peak earnings multiples; 2) we also should recognize an uncomfortably large potential for market losses, particularly given that the current bull market has now outlived the median and average bull, yet at higher valuations than most bulls have achieved, a flat yield curve with rising interest rate pressures, an extended period of internal divergence as measured by breadth and other market action, and complacency at best and excessive bullishness at worst, as measured by various sentiment indicators; 3) there is a moderate but still not compelling risk of an oncoming recession, which would become more of a factor if we observe a substantial widening of credit spreads and weakness in the ISM Purchasing Managers Index in the months ahead, and; 4) there remains substantial potential for U.S. dollar weakness coupled with «unexpectedly» persistent inflation pressures, particularly if we do observe economic weakness.

The «normal cases» are future price / peak earnings multiples of 14 (the historical average) and 11 (the historical median).

Not exact matches

While it's true that the market established even deeper valuation troughs in 1974 and 1982 (near 7 times prior peak earnings, compared with the current multiple of about 11), it is important to remember that long - term Treasury yields were 8 % in 1974, and 14 % in 1982, compared with about 4 % at present.

Add these factors together, and investors face a long term total return of 7 % annually if P / E multiples remain fixed at record highs, and earnings grow along the peak of their long - term growth channel.

While the current price / peak - earnings multiple is already at an elevated level above 18, what I'll call the «P / E equivalent» multiples on other fundamentals are: 21 on the basis of book values, nearly 23 on the basis of enterprise value / EBITDA (which factors in the increasing share of debt on corporate balance sheets), over 25 on the basis of revenues, and 29 on the basis of dividends (largely because dividend payout ratios remain relatively low even on the basis of normalized earnings).

It shows the overall compression of the S&P 500 price - to - peak - earnings multiple in each of those post-war bear markets.

The S&P 500 registered a record high after an advancing half - cycle since 2009 that is historically long - in - the - tooth and already exceeds the valuation peaks set at every cyclical extreme in history but 2000 on the S&P 500 (across all stocks, current median price / earnings, price / revenue and enterprise value / EBITDA multiples already exceed the 2000 extreme).

The price / peak - earnings multiple is the ratio of the S&P 500 to the highest level of earnings attained to date, even if current earnings on the index have declined below that peak.

To wit, suppose that despite elevated profit margins, earnings continue to grow along the peak of their long - term 6 % growth channel over the coming 5 years, and the market's P / E multiple simply touches 14, even briefly.

I frequently present calculations of probable long - term stock returns by making a few assumptions about long - term peak - to - peak growth in earnings and various future P / E multiples.

This despite the fact that the 2007 peak reflected rich valuation multiples against earnings that were themselves inflated by abnormally elevated profit margins.

Presently, the price / peak - earnings multiple on the S&P 500 is just over 10, but that is based on peak earnings of about $ 86 for the Index.

But five of the nine recession - induced bear markets began from a multiple of less than 15 times peak earnings.

The sell - side in these types of situations tends to value companies at peak multiples of trough earnings, and only shifts to the more mid-cycle earnings and valuation we use when there's clear evidence the cycle has turned.

Price - to - earnings ratio is sensitive to cyclical peaks and troughs unless multiple years of earnings are used.

Historically, the changes in multiples that investors paid for a dollar of sales have tracked closely the changes in multiples that investors paid for a dollar of peak earnings.

During periods where the S&P 500 price - to - peak - earnings multiple was less than 15, an initial rate cut was followed by annualized S&P 500 returns of 43.2 % over 6 months, 26.1 % over 12 months, and 25.4 % over 18 months.

It is no coincidence many of Applegreen's competitors have been recently sold as the founders are taking advantage of peak multiples on peak earnings.

modest proposal discount to real estate value, low multiple cyclicals at peak earnings, insurers, specialty finance co's on backside of growth

discount to real estate value, low multiple cyclicals at peak earnings, insurers, specialty finance co's on backside of growth