I post a monthly market valuation update based on the cyclical P/E ratio using the 10-year average of as-reported earnings. I use As Reported earnings because it factors in write-offs and restructuring charges and it is consistent with the historical data popularized by Yale professor Robert Shiller's research. My source for the most recent earnings is the Standard & Poor's Excel file maintained by Senior Index Analyst Howard Silverblatt and available on the Standard & Poor's website (free registration required). The numbers I want are in column D on the ESTIMATES&PEs tab.

The quarterly earnings for the most recent completed quarter are adjusted several times a month, and there are as-reported earnings estimates for the next several quarters (currently through 2011), also subject to frequent revisions. My monthly update includes a table showing the earnings for most recent quarters and the estimates for the rest of the year. I also include monthly earnings numbers using a linear interpolation for the two months between the quarters.

This morning I took a look to see the latest Silverblatt numbers, dated May 5th, and I noticed a change in the as-reported earnings estimates from the previous spreadsheet posted one week earlier. See the table below for a comparison of the two (note: each number is the sum of the current quarter and the previous three).

That 4.7% reduction for Q3 was a bit surprising. To put that into context, based on today's close, the P/E ratio based on the trailing 12-month (TTM) earnings for Q3 is the difference between a P/E of 17.97 (latest estimate) versus 17.13 (last week's estimate). Incidentally, the average TTM P/E for the S&P Composite since 1871 is 15.48.

Value Investing

If you're interested in market valuation updates, you should bookmark this link to valuewalk.com. Jacob Wolinsky, a devoted value investor, does a monthly valuation update that features several metrics for the market: Current P/E TTM, the cyclical P/E10, Price-to-Book Value, Dividend Yield, Market Cap as Percent of GDP, and Tobin's Q Ratio. Here is a link to Jacob's May update.

I have a link to the website by its title, Value Investing, in my dshort.com favorites in the right column.