As of January 1, 2025, the FTSE 100 index has a trailing price-to-earnings (P/E) ratio of 12.85, while the forward P/E ratio is 11.24. The cyclically adjusted price-to-earnings (CAPE) ratio is 18.20.
During the COVID-19 pandemic, the earnings of many major UK companies experienced a steep decline. However, in the years that followed, corporate profits rebounded swiftly. Despite this recovery, 2024 was a particularly difficult year for British businesses, resulting in a significant drop in earnings. Looking ahead to 2025, analysts anticipate only a modest recovery in corporate profits.
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| Date | FTSE 100 Price | P/E (TTM) | EPS (TTM) * | Forward P/E | EPS (Forward) * | CAPE Ratio |
|---|---|---|---|---|---|---|
| 12/31/2024 | 8,173.02 | 12.85 | 147.31 | 11.24 | 168.43 | 18.20 |
| 6/30/2024 | 8,164.12 | 14.46 | 130.76 | 11.54 | 163.87 | 18.64 |
| 12/31/2023 | 7,733.24 | 10.51 | 170.50 | 10.65 | 168.19 | 18.33 |
| 6/30/2023 | 7,531.53 | 10.85 | 160.73 | 10.14 | 172.04 | 18.42 |
| 12/31/2022 | 7,451.74 | 13.88 | 124.32 | 9.99 | 172.78 | 19.28 |
| 6/30/2022 | 7,169.28 | 15.34 | 108.24 | 10.14 | 163.77 | 19.31 |
| 12/31/2021 | 7,384.54 | 17.10 | 100.00 | 11.71 | 146.07 | 20.40 |
* The table presents both trailing and forecasted Earnings Per Share (EPS), with values indexed to a base of 100 as of January 1, 2022. EPS (TTM) reflects the aggregate earnings of the FTSE 100 index stocks for the past 12 months and is calculated using the net income of the companies. EPS (Forward) is the forecasted (analyst consensus) earnings per share for the next 12 months and is calculated using the estimated operating profit of the companies.
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Earnings Growth of FTSE 100 Companies
The earnings growth of FTSE 100 companies has experienced significant volatility in recent years, largely influenced by the pandemic and the subsequent economic environment.
During the COVID-19 pandemic, corporate earnings for FTSE 100 companies plummeted, as many industries faced severe disruptions. Lockdowns, supply chain issues, and reduced consumer spending led to a sharp decline in profitability across various sectors, especially in industries like travel, retail, and energy.
After the pandemic, earnings recovered quickly, as economies reopened and businesses adapted to new conditions. The FTSE 100 companies benefited from strong rebounds in demand, especially in sectors like consumer goods, healthcare, and commodities. Additionally, government stimulus and low interest rates helped to fuel the recovery, boosting earnings growth for many large corporations.
However, 2024 proved to be a challenging year for British companies. Earnings started to decline again, largely due to inflation and cost pressures, global economic uncertainty and geopolitical tensions (such as the ongoing impact of the Russia-Ukraine conflict), and the strong pound and the tightening of monetary policy in the UK.
Despite the struggles in 2024, earnings are expected to recover in 2025. Analysts anticipate that as inflationary pressures ease, business conditions improve, and consumer confidence rises, FTSE 100 companies will experience a rebound in earnings. A stabilizing global economy, coupled with more favorable conditions for growth, is expected to help support a return to positive earnings growth across the index.
FTSE 100 Index
The FTSE 100 (Financial Times Stock Exchange 100 Index) is the benchmark stock index of the 100 largest publicly traded companies listed on the London Stock Exchange (LSE). It is one of the most widely followed indices in Europe and represents the performance of the UK’s blue-chip companies. The index was launces in January 3, 1984 and is maintained by FTSE Russell (a subsidiary of the London Stock Exchange Group).
The FTSE 100 is heavily weighted towards multinational corporations, many of which generate significant revenue outside the UK. Unlike the S&P 500, which is more tech-heavy, the FTSE 100 is dominated by energy, financials, and industrials. The index has a high exposure to commodities, making it sensitive to oil, gas, and metals prices.
The key sectors include:
• Energy (e.g., BP, Shell)
• Financials (e.g., HSBC, Barclays)
• Consumer Goods & Retail (e.g., Unilever, Diageo)
• Healthcare (e.g., AstraZeneca, GSK)
• Mining & Materials (e.g., Rio Tinto, BHP)