Projected P/Es Lower U.S. Stock Valuation More Than Usual

Projected earnings make U.S. stocks even less costly than usual relative to past results. Comparisons using the Russell 1000 growth and value indexes show as much. The growth index’s forward price-earnings ratio was 29% lower than the P/E derived from results for the previous four quarters. This gap was the biggest since February 2004, according to data compiled by Bloomberg. The comparable spread for the value index was 37%, the widest since December 2009. Both discounts were highlighted by Liz Ann Sonders, Charles Schwab Corp.’s chief investment strategist, in a Twitter post Monday.