Trailing Price to Earnings by Sector: S&P 500

Ari Sears

Metaverse

14 mins

Sep 09, 2022 14:23

This report analyses the trailing price to earnings by sector for the S&P 500, based on data from financial filings up to the second quarter of 2022.

Looking at the trailing price-earnings-book-value (PEBV) ratio for the S&P 500, it appears that not much has changed from September 30th, 2021 to August 12th, 2022.

This report provides analysis of the S&P 500 and sectors based on latest audited financial data or 1Q22 10-Qs in most cases. Price data for the current period as of 5/16/22 is also included.

I calculate these metrics based on S&P Global's (SPGI) methodology, which sums the individual S&P 500 constituent values for market cap and economic book value before using them to calculate the metrics. I call this the "Aggregate" methodology. Get more details in Appendices I and II.

S&P 500's trailing PEBV ratio nears year-ago levels

The trailing PEBV ratio is a good indicator of the S&P 500's expected future profits. The ratio implies that the S&P 500's profits will increase by 40% from their current levels to 2Q22. This is a positive sign for the future of the stock market and the economy.

S&P 500 Sectors: Key Details

The S&P 500 sectors that trade below their economic book value are Telecom Services, Energy, and Basic Materials. The Financials and Healthcare sectors trade at their economic book value. Figure 2 shows the Telecom Services sector has the lowest trailing PEBV ratio among all eleven S&P 500 sectors based on prices as of 8/12/22 and financial data from 2Q22 10-Qs.

It's no surprise that the Telecom Services sector has the lowest PEBV ratio in 2Q22, given the challenges that the industry is facing. A PEBV ratio of 0.6 means that the market expects the sector's profits to decline by 40% from the 2Q22 TTM level. This is in contrast to sectors like Real Estate and Consumer Cyclicals, which are expected to see improving profits.

I believe that the Telecom Services sector will continue to be a key driver of growth in the coming years. This sector provides critical infrastructure and services that enable businesses and consumers to communicate with each other.

Telecom Services: Trailing PEBV Ratio = 0.6

The telecom services sector has seen a rise in its trailing PEBV ratio, from 0.5 as of 9/30/21 to 0.6 as of 8/12/22. However, this sector has also experienced a decline in market cap, from $723 billion as of 9/30/21 to $592 billion as of 8/12/22. Its economic book value has also fallen, from $1.4 trillion as of 9/30/21 to $1.1 trillion as of 8/12/22.

The Telecom Services Trailing PEBV Ratio is a measure of how much value investors are placing on each dollar of earnings for companies in the telecom sector.

The August 12, 2022 measurement period uses price data as of that date and incorporates the financial data from 2Q22 10-Qs. This is the earliest date for which all the calendar 2Q22 10-Qs for the S&P 500 constituents were available. This gives us a clear picture of the state of the market and allows us to make accurate predictions about future trends.

It is interesting to see the trends for market cap and economic book value for the Telecom Services sector since 2004. The aggregate methodology used here provides a good match for S&P Global's own calculation approach. It will be interesting to see how these trends continue to develop over time.

The telecom services market is expected to continue growing in the coming years, driven by continued innovation and the increasing demand for data services. Economic book value is also expected to continue growing, driven by the increasing use of telecommunications services by businesses and consumers.

Looking ahead to the August 12, 2022 measurement period, we can expect the financial data from 2Q22 10-Qs to be incorporated into the price data as of that date. This will provide a more accurate picture of the market as a whole and allow investors to make more informed decisions.

The Aggregate methodology provides a clear and concise overview of the entire S&P 500/sector, allowing for easy comparison between firms of different sizes and index weightings. This makes it an ideal tool for investors looking to get a broad sense of how the market is performing.

There are three main methods for measuring the trailing price-to-earnings ratio (PEBV) of the aggregate market: market-weighted metrics, market-weighted drivers, and the Aggregate method. Each of these has its own advantages and disadvantages, which are outlined in more detail in the Appendix. Of these three methods, the Aggregate method is the most accurate and comprehensive, as it takes into account all of the companies in the market, regardless of their size or weight.

The three methods for calculating the Telecom Services sector trailing PEBV ratio are compared in Figure 3. The results show that the three methods produce similar results.

There are many different ways to value a telecom company, but one popular method is to compare its price-to-earnings before interest, taxes, depreciation, and amortization (PEBV) ratio to its peers.

The August 12, 2022 measurement period uses price data as of that date and incorporates the financial data from 2Q22 10-Qs. This is the earliest date for which all the calendar 2Q22 10-Qs for the S&P 500 constituents were available. This data provides a clear picture of the financial health of the companies in the index and will help investors make informed decisions about where to allocate their capital.

The authors of this article receive no compensation for writing about any specific stock, style, or theme. This article is intended to provide readers with unbiased and objective information.

Appendix: Analyzing Trailing PEBV Ratio with Different Weighting Methodologies

I am the Aggregate methodology for calculating the trailing PEBV ratio for the S&P 500/sector. I sum the individual constituent values for market cap and economic book value to derive this metric. I believe this is the most accurate way to calculate the PEBV ratio for the S&P 500/sector.

The Aggregate methodology provides a clear and concise overview of the entire S&P 500/sector, regardless of firm size or index weighting. This is extremely helpful for investors who want to get a broad sense of how the market is performing. Additionally, the fact that this methodology matches how S&P Global (SPGI) calculates metrics for the S&P 500 gives it even more credibility.

I believe that the Aggregate method for trailing PEBV ratio is superior to other market-weighted methodologies because it takes into account more factors. This makes it more accurate and reliable, which is why I believe it is the best method for determining the value of a company.

Looking at market-weighted metrics can give investors a good sense of how expensive a particular stock or sector is relative to others. This can be helpful in making investment decisions and determining whether a particular stock or sector is overvalued or undervalued.

1. I believe that the company weight is a very important metric to watch when investing in a company. This is because it shows how much of the company's value is tied to the overall market. If the company weight is high, then the company is more likely to be affected by changes in the market.
2. I multiply each company's trailing PEBV ratio by its weight to get a sense of how much each company is worth relative to its peers.
3. The S&P 500/sector trailing PEBV equals the sum of the weighted trailing PEBV ratios for all the companies in the S&P 500/sector. This is a strong indicator of the health of the stock market and the economy as a whole.

I believe that market-weighted drivers are a great way to calculate the market cap and economic book value for each company in a sector. This method takes into account the company's size and importance in the market, and provides a more accurate picture of the sector's overall health.

1. I see the company weight as being a key metric for investors to watch. It can help them gauge the relative importance of a company within its sector or the overall market. I believe that this metric will continue to gain in importance as investors increasingly look to diversify their portfolios.
2. I believe that the market cap and economic book value of each company are important indicators of its health and potential. By multiplying these values by the company's weight, we can get a more accurate picture of its worth.
3. I determine the weighted market capitalization and weighted economic book value for each company in the S&P 500/each sector to find the S&P 500 or sector's weighted free cash flow and weighted enterprise value. This gives me a clear picture of the current state of the market and allows me to make more informed investment decisions.
4. The S&P 500/Sector trailing PEBV ratio allows investors to compare the current market value of a sector against its economic book value. This ratio can be used to help identify sectors that may be under- or over-valued relative to others.

There are many different ways to approach data analysis, and each has its own advantages and disadvantages. Some methods are more suited to certain types of data or certain questions, while others are more versatile.

I think the aggregate method is a great way to collect data. It allows for a concise and organized way to present information.

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• The S&P 500 is a broad and comprehensive index that covers the entire US stock market. It includes all sectors and company sizes, making it an ideal barometer for the US economy.
• S&P Global's method for calculating metrics for the S&P 500 is extremely accurate and efficient. This makes it one of the best tools for investors to use when making decisions about where to invest their money.

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• While the group of companies is vulnerable to the impact of companies entering or exiting the group, which could unduly affect aggregate values, it is also susceptible to outliers in any one period. This makes it important to monitor the group closely and make adjustments as necessary to ensure that the overall portfolio remains healthy.

The market-weighted metrics method is a great way to measure the performance of a portfolio.

I believe that the pros outweigh the cons when it comes to this topic.

• A new financial analysis tool has been developed that takes into account a firm's market capitalization relative to the S&P 500/sector. This tool weights the firm's metrics accordingly, providing a more accurate picture of the company's financial health.

There are some drawbacks to this approach. First, it can be difficult to find reliable sources of information.

• I believe that the trailing PEBV ratio is vulnerable to outlier results from a single company. I think that this can disproportionately impact the overall ratio, as I will show below.

There are a number of different ways to weight stocks in a portfolio, but the market-weighted drivers method is one of the most popular.

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• The market capitalization of a company is a measure of its size and relative importance in the stock market. A company's market cap is determined by its share price and the number of shares outstanding. The market cap of a company is a good indicator of its relative size and importance in the stock market.
• The new system mitigates the disproportionate impact of outlier results from one company on the overall results. This is a positive development, as it will help to ensure that the results are more representative of the entire market.

There are several potential drawbacks to implementing a new software system. One is the cost of purchasing and installing the software.

• As a news article, I would be interested in exploring the potential reasons behind why some firms are more susceptible to large swings in market cap or economic book value. In particular, I would want to look at firms with a large weighting in the S&P 500/Sector to see if there are any commonalities that could explain why they are more volatile.