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	31.7	21.6	5.89	20.8	3.2%	0.97%	25.4	$74.4T	502
Nasdaq 100	40.5	23.9	11.08	28.1	2.5%	0.40%	32.8	$44.1T	100
Dow 30	32.9	24.4	9.42	23.5	3.0%	0.76%	27.8	$25.5T	30
Russell 1000	34.9	14.8	6.34	23.4	2.9%	0.68%	24.7	$62.0T	991
Russell 2000	24.1	19.7	2.30	13.8	4.2%	1.55%	17.8	$3.7T	1937

Sector	P/E	Fwd P/E	EV/EBITDA	Div Yield	Weight	Stocks
Technology	45.9	28.8	33.0	0.40%	37.1%	86
Communication Services	27.7	17.1	18.9	0.49%	15.8%	21
Financial Services	18.3	15.5	15.8	1.51%	10.8%	70
Consumer Cyclical	36.0	23.7	20.5	0.59%	8.8%	51
Healthcare	30.3	20.8	17.6	1.50%	8.4%	60
Industrials	30.8	25.3	19.5	1.47%	6.1%	68
Consumer Defensive	29.5	22.6	18.5	2.25%	4.6%	37
Energy	24.9	12.3	11.0	2.42%	3.2%	22
Utilities	22.9	18.7	14.5	2.37%	2.1%	32
Real Estate	36.1	33.9	21.7	3.44%	1.5%	31
Basic Materials	34.1	18.7	15.9	1.68%	1.5%	24

#	Ticker	Company	Sector	P/E	Fwd P/E
1	CHTR	Charter Communications, Inc.	Communication Services	3.0	2.7
2	CMCSA	Comcast Corporation	Communication Services	4.0	6.2
3	EIX	Edison International	Utilities	4.7	8.8
4	ALL	The Allstate Corporation	Financial Services	5.9	6.3
5	LULU	Lululemon Athletica Inc.	Consumer Cyclical	7.1	7.2
6	FISV	Fiserv, Inc.	Technology	7.2	6.3
7	UHS	Universal Health Services, Inc.	Healthcare	7.7	7.8
8	SYF	Synchrony Financial	Financial Services	7.8	7.7
9	T	AT&T Inc.	Communication Services	8.0	10.4
10	ACGL	Arch Capital Group Ltd.	Financial Services	8.2	10.0

#	Ticker	Company	Sector	P/E	Fwd P/E
1	DOC	Healthpeak Properties, Inc.	Real Estate	190.0	42.4
2	IRM	Iron Mountain Incorporated	Real Estate	237.8	46.8
3	AMD	Advanced Micro Devices, Inc.	Technology	245.1	85.1
4	PANW	Palo Alto Networks, Inc.	Technology	262.4	100.2
5	GPC	Genuine Parts Company	Consumer Cyclical	271.0	16.5
6	AXON	Axon Enterprise, Inc.	Industrials	277.2	54.4
7	ON	ON Semiconductor Corporation	Technology	297.6	27.0
8	PLTR	Palantir Technologies Inc.	Technology	304.9	120.2
9	MCHP	Microchip Technology Incorporated	Technology	312.5	51.8
10	TSLA	Tesla, Inc.	Consumer Cyclical	352.5	226.7

S&P 500 Valuation Dashboard

S&P 500 is trading at a statistically elevated 31.7x 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