U.S. corporate earnings have been under pressure for some time, based on reported operating earnings for the S&P 500. Indeed, the bloom fell off the rose a year ago, when S&P earnings took a dive in 2007’s fourth quarter from the formerly plush levels.
A lower level of earnings has prevailed ever since, as our chart above shows. But bottom-up estimates (as per Standard & Poor’s as of December 16) are looking up for 2009. If the forecast proves accurate, by this time next year S&P 500 operating earnings will return to the heights of 2007. If such an earnings rebound is coming, the S&P 500 looks inexpensive based on the forward earnings multiple of 10.6, as per the full-year 2009 earnings estimate of $83.44.