Courtesy of Mish.
How many P/E ratios are there? Let me count the ways.
- As companies report for tax purposes (the real P/E).
- As as trumped up by mainstream media (the pro-forma P/E also called operating earnings).
- As further trumped up by mainstream media (forward estimates, typically wildly off) based on pro-forma PE ratios.
I am quite sure I have missed other creative measures spewed out by market analysts promoting the message “stocks are cheap”.
However, let’s dive into an analysis of the above.
Russell 2000 P/E
As of the 2015, the as-reported P/E of the Russell 200 index was 3,474. It is now 691. But all the reports are not yet in.
Meanwhile forward estimates, throwing out all companies with negative earnings is 17.17.
Hmm, that creates another ridiculous measure: Throw out anything horrific, and average the rest, all pro-forma of course.
