P/E Multiples

December 17, 2019
Blog , The Portfolio Strategist - Terry Gardner
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C.J. Lawrence Weekly – Trade Deal and an Earnings Driven Market

Our CJL Rule of 20 tells us that the sum of the forward P/E multiple on the S&P 500 added to the annual CPI core inflation rate should equal about 20. The current reading is 20.1, which sounds about right. Therefore, for stocks to move higher without violating the Rule, the “E” portion of the ...

March 4, 2019
Blog , The Portfolio Strategist - Terry Gardner
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C.J. Lawrence Weekly – Low Interest Rates Add Fuel to the Stock Market Recovery

For stock investors, low rates are a welcome market backdrop, and have helped stocks recover from their December lows. Of course, favorable headlines regarding a pending trade deal between the U.S. and China have helped boost market sentiment, but the fundamental underpinning of low interest rates ...

December 3, 2018
Blog , The Portfolio Strategist - Terry Gardner
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C.J. Lawrence Weekly – Earnings on Watch

Despite growing consensus expectations of both slowing international trade and global growth, company analysts have not dramatically ratcheted back their 2019 sales and earnings growth forecasts and are therefore unlikely to raise them if a deal is consummated. ...

November 26, 2018
Blog , The Portfolio Strategist - Terry Gardner
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C.J. Lawrence Weekly – Checking the Pulse of the Freight Economy

The shift in economic and market sentiment during the past few weeks has been palpable. The once synchronized global growth chorus has subsided and has been replaced with a negative refrain of global growth deceleration. ...

September 10, 2018
Blog , The Portfolio Strategist - Terry Gardner
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C.J. Lawrence Weekly – Stock Valuations and Earnings Growth Play Tug-of-War in Earnings-Driven Markets

rom the beginning of 2013 to the end of 2017 the S&P 500 Index price rose 87%. During that period S&P 500 earnings per share rose 25% while the Index’s price-to-earnings (P/E) multiple expanded by 62%. That mix is now reversing. The P/E multiple on the S&P 500, using next-twelve-months earnings...

May 29, 2018
Blog , The Portfolio Strategist - Terry Gardner
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C.J. Lawrence Weekly – Growth Stocks Reaccelerate

Since January of 2009, the S&P 500 Growth Index has delivered a 326% total return, while the S&P 500 Value Index returned 212% during the same period. Definitions of what constitutes value stocks and growth stocks differ, but most agree that to qualify as a value stock a company’s shares should ...

May 7, 2018
Blog , The Portfolio Strategist - Terry Gardner
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C. J. Lawrence Weekly – Falling Down on the Multiple Staircase

In the 1980s, C.J. Lawrence Chairman, Jim Moltz, observed the long-term cyclical trends in P/E multiples and coined the progression, the “Multiple Staircase” (see chart below). The Multiple Staircase showed that the S&P 500 P/E multiple trended in stair-step fashion, in one direction for abou...

April 30, 2018
Blog , The Portfolio Strategist - Terry Gardner
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C. J. Lawrence Weekly – Rising Rates Provide Headwind, not Barrier, for Stocks

There has been considerable focus in the financial media, and among market pundits, regarding the headwinds for stocks posed by rising interest rates. Our work agrees that rising rates do present challenges, but that strong corporate earnings growth can be a healthy off-set. ...

February 20, 2018
Blog , The Portfolio Strategist - Terry Gardner
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C.J. Lawrence Weekly – Financials Sector is the Baby that Should be Put Back in the Bath

We made the point in a recent Weekly Market Comment that the shrinking US publicly traded company share count could be a contributing factor to the equity market’s long bull run. The same phenomenon can also contribute to stock price volatility on a short-term basis, as witnessed during the last t...

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