Profits Climb to 51-Year Mean as S&P 500 P/E at Crisis Level

Earnings growth in the Standard & Poor’s 500 Index is climbing back to the average rate since the 1960s as the U.S. economy recovers, even with equity valuations stuck near credit-crisis levels.

Companies in the S&P 500 are poised to boost net income by 19 percent in 2011, including a 13 percent gain in the second quarter, according to analyst estimates compiled by Bloomberg. The gain will push profits back in line with their average increase of 6.9 percent over the last 51 years, data compiled by Brockhouse & Cooper Inc. and Bloomberg show. At the same time, the index is trading for 13.5 times projected 2011 earnings, 7.8 percent less than the average since the start of 2006.