COTD: Earnings & Profits Per Share Suggest Overvalution

Posted by Lance Roberts

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-earnings-profits-pershare-trend-082813-3The chart below shows several things of importance relating to the current valuation of the financial markets.  The only valid measure of market valuation that is historically consistent is trailing twelve month REPORTED earnings per share.  Using other measures such as operating, or pro-forma, earnings to try and justify current market levels is both inconsistent and inaccurate when performing valuation analysis.  I have also included price to corporate profits (NIPA) per share for a comparative measure.

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