Question 1

What is the P/E ratio of the S&P 500?

Accepted Answer

The S&P 500 P/E ratio is the aggregate price-to-earnings ratio calculated by dividing the total market capitalisation of all S&P 500 companies by their combined trailing-twelve-month net income. It measures how much investors are paying per dollar of earnings across the index. The historical average is roughly 15-17x.

Question 2

What is the difference between trailing P/E and forward P/E?

Accepted Answer

Trailing P/E uses earnings from the past 12 months (actual reported results). Forward P/E uses consensus analyst earnings estimates for the next 12 months. Forward P/E is typically lower because analysts expect earnings to grow. A large gap between trailing and forward suggests strong expected growth.

Question 3

What is earnings yield?

Accepted Answer

Earnings yield is the inverse of P/E (i.e., 1 / P/E). It expresses how much earnings you get per dollar invested. For example, a P/E of 25 equals a 4% earnings yield. Investors compare earnings yield to risk-free Treasury yields to gauge whether stocks offer adequate compensation over bonds.

Question 4

How is the aggregate P/E calculated?

Accepted Answer

We use the market-cap-weighted method: total market cap of all index members divided by total positive net income (TTM). Loss-making companies contribute zero to the denominator, which is the standard institutional approach used by S&P Global.

Question 5

Why are some sector P/E ratios very high?

Accepted Answer

Sectors with many growth stocks (Technology, Consumer Discretionary) or heavy depreciation (Real Estate/REITs) tend to have elevated P/E ratios. This doesn't necessarily mean overvaluation — forward P/E and EV/EBITDA often give a more balanced picture for these sectors.

Question 6

Is a high P/E ratio bad?

Accepted Answer

Not necessarily. A high P/E can reflect strong expected growth (justified by forward earnings), a low-risk industry premium, or genuine overvaluation. Compare trailing P/E with forward P/E: if forward P/E is significantly lower, earnings are expected to grow, which may justify the current premium.

Index	P/E	Fwd P/E	P/B	EV/EBITDA	Earn. Yield	Div. Yield	Median P/E	Mkt Cap	Stocks
S&P 500	31.0	22.7	5.66	20.3	3.2%	1.01%	24.6	$71.1T	502
Nasdaq 100	38.9	25.3	10.56	26.7	2.6%	0.42%	33.9	$40.9T	100
Dow 30	31.4	23.9	8.79	22.0	3.2%	0.84%	26.4	$23.0T	30
Russell 1000	34.6	15.4	6.17	22.9	2.9%	0.71%	24.4	$58.9T	991
Russell 2000	23.3	19.7	2.26	13.4	4.3%	1.59%	17.5	$3.6T	1937

Sector	P/E	Fwd P/E	EV/EBITDA	Div Yield	Weight	Stocks
Technology	45.3	27.6	31.8	0.43%	34.1%	80
Communication Services	27.7	22.0	19.0	0.49%	16.6%	24
Financial Services	18.4	16.4	16.2	1.49%	11.6%	69
Consumer Cyclical	36.6	28.2	20.8	0.63%	9.3%	52
Healthcare	28.1	18.7	16.4	1.65%	8.0%	60
Industrials	31.9	26.5	20.1	1.39%	7.1%	74
Consumer Defensive	30.0	23.7	18.2	2.18%	5.0%	37
Energy	21.2	12.4	9.6	2.81%	2.9%	23
Utilities	24.5	20.1	15.1	2.23%	2.4%	32
Real Estate	38.5	37.1	22.4	3.22%	1.7%	31
Basic Materials	34.8	18.9	16.0	1.44%	1.5%	20

#	Ticker	Company	Sector	P/E	Fwd P/E
1	CHTR	Charter Communications, Inc.	Communication Services	3.6	3.2
2	CMCSA	Comcast Corporation	Communication Services	4.2	6.5
3	CAG	Conagra Brands, Inc.	Consumer Defensive	5.5	7.8
4	ALL	The Allstate Corporation	Financial Services	5.8	7.5
5	UHS	Universal Health Services, Inc.	Healthcare	6.1	6.0
6	EIX	Edison International	Utilities	6.1	11.6
7	T	AT&T Inc.	Communication Services	7.4	9.7
8	FISV	Fiserv, Inc.	Technology	7.7	6.0
9	PYPL	PayPal Holdings, Inc.	Financial Services	7.8	7.9
10	KLAC	KLA Corporation	Technology	7.9	6.4

#	Ticker	Company	Sector	P/E	Fwd P/E
1	PANW	Palo Alto Networks, Inc.	Technology	176.3	74.8
2	TPR	Tapestry, Inc.	Consumer Cyclical	177.9	20.9
3	AMD	Advanced Micro Devices, Inc.	Technology	193.4	68.6
4	DOC	Healthpeak Properties, Inc.	Real Estate	194.0	64.9
5	PLTR	Palantir Technologies Inc.	Technology	207.4	89.5
6	GPC	Genuine Parts Company	Consumer Cyclical	225.8	13.8
7	IRM	Iron Mountain Incorporated	Real Estate	256.0	52.9
8	AXON	Axon Enterprise, Inc.	Industrials	280.1	55.0
9	TSLA	Tesla, Inc.	Consumer Cyclical	367.0	210.2
10	ON	ON Semiconductor Corporation	Technology	389.4	36.6

S&P 500 Valuation Dashboard

S&P 500 is trading at a statistically elevated 31.0x earnings.

S&P 500 is above historical norms

Are Earnings Growing Into the Valuation?

Stocks vs Bonds — Is It Worth the Risk?

How Do Indices Compare?

Which Sectors Are Cheap vs Expensive?

Cheapest & Most Expensive in S&P 500

10 Most Discounted (Lowest P/E)

10 Most Elevated (Highest P/E)

Frequently Asked Questions

Analyze Top S&P 500 Stocks