The table below presents the current and historical price-to-earnings (P/E) and cyclically adjusted price-to-earnings (CAPE) ratios for the FTSE 100 index. As of January 1st, 2025, the index’s trailing P/E stands at 12.85, while the CAPE ratio is 18.20. During the COVID-19 pandemic, the earnings of many major UK companies plummeted. Following the pandemic, corporate earnings rebounded quickly. However, 2024 proved to be a challenging year for British companies, leading to a decline in earnings.

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FTSE 100 – P/E (TTM), EPS (TTM) & CAPE Ratio

* The EPS (earnings per share) in the table above has been indexed to a base value of 100 as of January 1, 2020.

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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)