Skip to content

Normalized Earnings

Feb 05 2021

Normalize This!

  • Feb 5, 2021

The sell-side is at it again, publishing a one-year ahead “Adjusted” EPS figure for the S&P 500 that is unlikely to be achieved—and then affixing P/E multiples seen near an historic market peak to “capitalize” on those unlikely earnings.

Apr 06 2020

Time To Revisit “Why We Normalize Earnings”

  • Apr 6, 2020

With an economic calamity and the Easter season upon us, we thought this would be a great time to resurrect our “Why We Normalize Earnings” vignette. Long time readers will recognize this as a staple from Green Books’ past.

Dec 06 2013

Small/Mid/Large Cap Internals

  • Dec 6, 2013

Small Caps are selling at a 20% valuation premium relative to Large Caps, using non-normalized trailing operating earnings.

Jun 05 2011

Assessing Stock Market Valuation Tools: Which Work—And Which Don’t?

  • Jun 5, 2011

“Of Special Interest” this month evaluates several stock market valuation techniques. Newfangled valuation techniques do not always lead to better results.


Feb 04 2011

Smoothing Out The Cycle… And The “Psyche”

  • Feb 4, 2011

Fundamental rationales also have strong psychological elements. Normalizing earnings helps minimize the startling impact of declining earnings.


Apr 04 2009

A "Bottom Up" Look At Normal Earnings

  • Apr 4, 2009

We’ve been receiving a lot of client questions on normalizing earnings. We take a look at a “Bottom Up” approach and give a simplistic description of our approach.

Nov 05 2008

Normalized Earnings…..A Primer

  • Nov 5, 2008

Normalized P/E ratios show stock market to be cheap, but what are “normalized earnings”? We present our methodology and rationale is this month’s “Inside The Stock Market” section. While U.S. stocks are cheap, foreign stock markets look even cheaper.


Dec 05 2007

Time To Revisit "Why We Normalize Earnings"

  • Dec 5, 2007

Earnings are very cyclical by nature, the ebb and flow can cause P/E ratios to move in erratic, less meaningful ways.

May 05 2007

View From The North Country

  • May 5, 2007

Steve Leuthold discusses the rationale for using “normalized” earnings versus 12-month earnings and how it now makes little sense to sell in May and go away…..unless you need a long vacation.

Jan 05 2003

Is The Stock Market's Current P/E Dangerously High?

  • Jan 5, 2003

It is possible for new bull markets to emerge from high P/E levels. Earnings are cyclical, so when earnings decline in a recession, it can mark a very good buying opportunity despite high P/Es.

Dec 04 2002

Valuations Are Sky High…How Can The Leuthold Group Be Bullish?

  • Dec 4, 2002

An explanation herein, with the use of our trusty histograms.

Jul 03 2002

Dealing With The Earnings Quagmire

  • Jul 3, 2002

A review of how companies can manipulate their earnings.

Jan 04 2002

Normalizing Earnings Is Now Essential

  • Jan 4, 2002

Earnings are cyclical and the economic cycle causes distortions.  A focus on which earnings to use and how to evaluate the differences.

Sep 04 2001

Tech Watch…..S&P Tech Subset Down 12% In August

  • Sep 4, 2001

Can there be a significant market rally without a tech rally? Maybe not. S&P 500 tech weight (16.9%) now slightly below our “normal” target weight of 17%.

Aug 04 2001

The Importance Of Normalizing Earnings

  • Aug 4, 2001

Earnings are cyclical! This becomes especially obvious near peaks and troughs.

May 05 1995

Normalizing Earnings...Decycling and Determining Underlying Earnings Power

  • May 5, 1995

Earnings normalization of some type is essential when making historical relative P/E comparisons. The more cyclical the earnings of a market index (or an individual company) the more important normalizing or smoothing becomes.

Aug 01 1989

How Much More Is in This Market?

  • Aug 1, 1989

Clients are asking how much more is in this market? Herein we will attempt to provide an answer to this question, without the aid of charts, astrology, or Evel Knutson. Rather, we will employ over 60 years of historical valuation facts.

Feb 04 1983

The DJIA Is Selling at Over 50 Times Earnings

  • Feb 4, 1983

The P/E for this most popular market measure is incredibly distorted by a handful of component stock. When will Dow Jones bite the bullet and improve this index?