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	31.4	22.9	5.76	20.4	3.2%	0.99%	26.1	$72.0T	502
Nasdaq 100	39.3	25.3	10.65	26.9	2.5%	0.42%	34.3	$41.2T	100
Dow 30	31.3	24.3	8.93	22.2	3.2%	0.83%	26.1	$23.3T	30
Russell 1000	34.5	15.4	6.17	23.1	2.9%	0.71%	25.6	$59.4T	991
Russell 2000	24.1	20.2	2.34	13.5	4.2%	1.53%	18.0	$3.7T	1937

Sector	P/E	Fwd P/E	EV/EBITDA	Div Yield	Weight	Stocks
Technology	45.0	26.7	31.5	0.43%	33.4%	80
Communication Services	28.1	22.3	19.3	0.48%	16.6%	24
Financial Services	19.0	16.9	16.4	1.45%	11.6%	69
Consumer Cyclical	37.2	28.7	21.2	0.62%	9.3%	52
Healthcare	29.8	20.5	17.6	1.52%	8.6%	60
Industrials	32.0	27.0	20.1	1.38%	7.1%	74
Consumer Defensive	30.2	23.8	18.3	2.17%	4.9%	37
Energy	21.3	12.4	9.6	2.79%	2.9%	23
Utilities	25.2	20.7	15.4	2.16%	2.4%	32
Real Estate	39.5	38.0	22.8	3.14%	1.7%	31
Basic Materials	34.3	18.5	15.8	1.46%	1.5%	20

#	Ticker	Company	Sector	P/E	Fwd P/E
1	CHTR	Charter Communications, Inc.	Communication Services	3.8	3.4
2	CMCSA	Comcast Corporation	Communication Services	4.3	6.7
3	CAG	Conagra Brands, Inc.	Consumer Defensive	5.8	8.3
4	EIX	Edison International	Utilities	6.6	12.4
5	ALL	The Allstate Corporation	Financial Services	6.6	8.3
6	T	AT&T Inc.	Communication Services	6.7	8.9
7	UHS	Universal Health Services, Inc.	Healthcare	7.0	6.9
8	SYF	Synchrony Financial	Financial Services	8.3	8.3
9	FISV	Fiserv, Inc.	Technology	8.3	6.5
10	PYPL	PayPal Holdings, Inc.	Financial Services	8.4	8.6

#	Ticker	Company	Sector	P/E	Fwd P/E
1	AMD	Advanced Micro Devices, Inc.	Technology	194.8	69.0
2	PANW	Palo Alto Networks, Inc.	Technology	210.7	89.3
3	PLTR	Palantir Technologies Inc.	Technology	213.3	92.4
4	DOC	Healthpeak Properties, Inc.	Real Estate	219.3	67.9
5	IRM	Iron Mountain Incorporated	Real Estate	236.2	48.8
6	GPC	Genuine Parts Company	Consumer Cyclical	273.8	16.7
7	ON	ON Semiconductor Corporation	Technology	314.1	29.5
8	MCHP	Microchip Technology Incorporated	Technology	323.7	53.7
9	TSLA	Tesla, Inc.	Consumer Cyclical	373.1	212.8
10	AXON	Axon Enterprise, Inc.	Industrials	424.1	83.3

S&P 500 Valuation Dashboard

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