As the Stock Market Sinks, Focus on Earnings—Not Valuations

While it’s never wise to write off price-to-earnings ratios, earnings have been growing at such a breakneck pace that it’s easy to see why bullish investors are looking past valuations. Wall Street analysts expect S&P 500 companies to earn $272.78 next year, implying profit growth of 11.7%, according to FactSet data culled by researcher Leuthold Group.