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	31.1	21.2	5.79	20.4	3.2%	0.98%	27.0	$73.0T	502
Nasdaq 100	38.1	22.5	10.43	26.5	2.6%	0.42%	34.5	$41.5T	100
Dow 30	32.8	24.3	9.38	23.4	3.0%	0.76%	29.1	$25.4T	30
Russell 1000	33.4	14.2	6.07	22.5	3.0%	0.71%	25.2	$59.4T	991
Russell 2000	24.3	20.1	2.26	13.4	4.1%	1.53%	17.6	$3.8T	1937

Sector	P/E	Fwd P/E	EV/EBITDA	Div Yield	Weight	Stocks
Technology	44.4	26.4	32.9	0.34%	43.9%	195
Communication Services	29.0	16.4	20.9	0.33%	18.0%	37
Consumer Cyclical	32.8	13.8	20.3	0.53%	11.8%	121
Financial Services	17.7	3.0	15.0	1.97%	7.7%	155
Healthcare	37.4	26.6	21.2	0.85%	5.9%	139
Industrials	31.7	22.6	18.7	0.92%	4.9%	124
Real Estate	30.6	23.9	18.5	4.06%	2.0%	75
Consumer Defensive	35.4	24.6	19.7	1.47%	1.8%	36
Utilities	23.8	17.7	14.8	1.82%	1.5%	29
Basic Materials	28.0	18.1	14.3	1.26%	1.4%	42
Energy	23.4	14.6	12.0	3.03%	1.3%	38

#	Ticker	Company	Sector	P/E	Fwd P/E
1	QFIN	Qfin Holdings, Inc.	Financial Services	0.4	0.3
2	WDH	Waterdrop Inc.	Financial Services	0.5	1.1
3	NOAH	Noah Holdings Limited	Financial Services	1.2	0.7
4	SOGP	Sound Group Inc.	Technology	1.6	0.4
5	JOYY	JOYY, Inc. Sponsored ADR Class A	Communication Services	2.1	15.7
6	LYFT	Lyft, Inc.	Technology	2.6	31.2
7	ATHM	Autohome Inc.	Communication Services	3.0	19.4
8	BYD	Boyd Gaming Corporation	Consumer Cyclical	3.2	9.9
9	VRRM	Verra Mobility Corporation	Technology	3.7	2.8
10	RUN	Sunrun Inc.	Technology	4.5	5.8

#	Ticker	Company	Sector	P/E	Fwd P/E
1	AXON	Axon Enterprise, Inc.	Industrials	274.6	53.9
2	MCHP	Microchip Technology Incorporated	Technology	286.6	47.5
3	KTOS	Kratos Defense & Security Solutions, Inc.	Industrials	294.4	45.7
4	HUBS	HubSpot, Inc.	Technology	310.7	20.1
5	PLTR	Palantir Technologies Inc.	Technology	311.4	122.8
6	TSLA	Tesla, Inc.	Consumer Cyclical	346.8	221.4
7	Z	Zillow Group, Inc. Class C	Communication Services	375.5	15.3
8	CIEN	Ciena Corporation	Technology	379.6	45.0
9	ZG	Zillow Group, Inc. Class A	Communication Services	388.3	15.8
10	AFRM	Affirm Holdings, Inc.	Technology	482.7	58.3

Russell 1000 Valuation Dashboard

Russell 1000 is trading at a statistically elevated 33.4x earnings.

Russell 1000 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 Russell 1000

10 Most Discounted (Lowest P/E)

10 Most Elevated (Highest P/E)

Frequently Asked Questions

Analyze Top S&P 500 Stocks