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S&P 500 P/E depends on how investors define “earnings”

The article says different approaches to measuring “earnings,” not just the headline P/E figure, can change how “cheap” the index looks.

Reported · Written up by our desk · Indices

The Wall Street Journal Markets highlights that arguments about whether the S&P 500 looks cheap often hinge on the index’s P/E ratio, but the key question is what definition of “earnings” is being used.

According to the outlet, “E” in the P/E calculation can vary depending on how investors treat earnings, which can lead to different conclusions about valuation for the same index.

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