Trailing PEs Near Historic Highs; Earnings Growth Questions Loom

Trailing PEs for the Russell 2500 (INDEXRUSSELL:R25I), Russell 2000 (INDEXRUSSELL:RUT), and Russell mid-cap are all approaching historic highs. Even the Russell Top 200, while not near a historic high, is above its historic average and rising steadily. After so much multiple expansion, these high valuation levels shouldn’t be a surprise, and they are further proof that companies will need to justify further price increases with earnings growth. Trailing PEs near the higher end “Several valuation metrics remain near the higher end of historical ranges. This implies increased reliance on earnings growth drivers as a market trigger during 2014,” writes Citi…