Forward multiples look better as EPS creeps higher

S&P 500 index valuations look attractive in 2019 as earnings creep up amid price volatility. The average daily price-to-earnings ratio of the index through Monday was 17.1, on par with 2018, while the average forward earnings-per-share estimate rose about 4.6% over last year's average to $166.66. The improving P/E multiples are the result of price volatility and slowing price growth as earnings push higher, albeit at a lesser rate than in previous years.

The index first passed the 3,000 milestone in late July and returned in the past weeks after a down August. So far there have been 13 new highs this year, but with an average drawdown of 3.8%. While the S&P 500 is up 19% on the year, periods of volatility and declines have given some investors pause in terms of its near-term stability.