Price to Operating Earnings (ttm)

Operating earnings are higher than as reported earnings because they do not take into account certain expenses. This has the effect of lowering the average price to operating earnings (P/OE) ratio from that of the price to as reported earnings (P/E) ratio. The P/OE ratio is often cited as showing the market is undervalued, yet it is generally only the case because the current multiple is being compared to the average of the P/E ratio. Over the period we have data for the P/OE ratio, the median level has been about 18, while that of the P/E ratio has been about 21. So although we don't have enough data to find the historical average of the P/OE ratio, we can guess it is a similar magnitude below the average of the full data set of the P/E ratio, or roughly 12.

The P/OE ratio, like the P/E ratio, is not so useful, because operating earnings can become temporarily depressed due to a recession.

Max   20 Yr   10 Yr    5 Yr
P/OE - Historical Chart of the S&P 500 Price to Operating Earnings Ratio Index Log Chart Source: Standard and Poor's