Wall Street strategists are almost unanimously bullish on the outlook for earnings.

Their estimates for S&P 500 earnings in 2026 range from $300 to $320 per share, implying 11% to 19% year-over-year growth from this year's expected level.

However, strategists are divided on valuations — specifically, on the direction of the forward price-earnings (P/E) ratio as it hovers near five-year highs.

Some argue that the elevated forward P/E is justified and sustainable, which should help the market deliver above-average returns in 2026.

Others argue that the high P/E is a market headwind, limiting returns as it potentially gravitates lower toward the long-term mean.

People who believe that valuations tend to revert to historical means (a phenomenon that's been disputed) lean toward that more conservative view. Maybe they'll be proven right this time.

TKer Stock Market Truth No. 6: Valuations won't tell you much about next year

While P/E ratios may help us understand whether prices look cheap or expensive relative to history, evidence shows the level of ...