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For those worried Wall Street may be getting ahead of itself, what with consecutive records for its major indexes throughout the week, there is another data point to worry about.

The forward price-to-earnings ratio on the S&P 500 hit 17.6, the highest level since 2004, according to FactSet.

FactSet said:

Back on December 31, 2016, the forward 12-month P/E ratio was 16.9. Since this date, the price of the S&P 500 has increased by 4.8% (to 2349.45 from 2238.83), while the forward 12-month EPS estimate has increased by 0.5% (to $133.49 from $132.84).

Thus, the increase in the “P” has been the main driver of the increase in the P/E ratio to 17.6 today from 16.9 at the start of the first quarter.

It is interesting to note that analysts are projecting record-level EPS for the S&P 500 for Q2 2017 through Q4 2017. If not, the forward 12-month P/E ratio would be even higher than 17.6.

Copyright The Financial Times Limited 2017. All rights reserved.
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