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	5.90	20.8	3.1%	0.97%	25.6	$74.4T	502
Nasdaq 100	40.3	23.8	11.02	27.9	2.5%	0.40%	33.3	$43.9T	100
Dow 30	32.9	24.5	9.42	23.5	3.0%	0.76%	27.7	$25.5T	30
Russell 1000	34.8	14.8	6.32	23.4	2.9%	0.68%	24.7	$61.9T	991
Russell 2000	24.1	19.7	2.30	13.8	4.2%	1.55%	17.7	$3.7T	1937

Sector	P/E	Fwd P/E	EV/EBITDA	Div Yield	Weight	Stocks
Technology	47.6	28.3	35.2	0.32%	45.1%	195
Communication Services	31.3	17.6	22.5	0.30%	18.6%	37
Consumer Cyclical	33.2	13.9	20.5	0.52%	11.4%	121
Financial Services	17.4	2.9	14.7	2.01%	7.2%	155
Healthcare	35.7	25.5	20.3	0.89%	5.4%	139
Industrials	32.1	22.9	19.1	0.91%	4.7%	124
Real Estate	30.4	23.8	18.5	4.10%	1.9%	75
Consumer Defensive	32.9	22.9	18.5	1.58%	1.6%	36
Utilities	25.2	18.7	15.7	1.72%	1.5%	29
Energy	23.2	14.7	11.9	3.05%	1.3%	38
Basic Materials	25.8	17.4	13.3	1.37%	1.2%	42

#	Ticker	Company	Sector	P/E	Fwd P/E
1	WDH	Waterdrop Inc.	Financial Services	0.5	1.1
2	QFIN	Qfin Holdings, Inc.	Financial Services	0.5	0.4
3	NOAH	Noah Holdings Limited	Financial Services	1.3	0.8
4	SOGP	Sound Group Inc.	Technology	1.6	0.4
5	JOYY	JOYY, Inc. Sponsored ADR Class A	Communication Services	2.1	15.3
6	LYFT	Lyft, Inc.	Technology	2.4	28.8
7	ATHM	Autohome Inc.	Communication Services	3.0	18.9
8	BYD	Boyd Gaming Corporation	Consumer Cyclical	3.1	9.5
9	VRRM	Verra Mobility Corporation	Technology	3.5	2.6
10	RUN	Sunrun Inc.	Technology	4.5	6.3

#	Ticker	Company	Sector	P/E	Fwd P/E
1	AXON	Axon Enterprise, Inc.	Industrials	280.1	54.9
2	ALAB	Astera Labs, Inc. Common Stock	Technology	280.5	85.7
3	STM	STMicroelectronics N.V.	Technology	289.2	38.5
4	MCHP	Microchip Technology Incorporated	Technology	290.6	48.2
5	VIAV	Viavi Solutions Inc.	Technology	303.1	48.5
6	Z	Zillow Group, Inc. Class C	Communication Services	320.6	13.0
7	KTOS	Kratos Defense & Security Solutions, Inc.	Industrials	325.8	50.6
8	ZG	Zillow Group, Inc. Class A	Communication Services	330.1	13.4
9	PLTR	Palantir Technologies Inc.	Technology	331.8	130.8
10	TSLA	Tesla, Inc.	Consumer Cyclical	354.4	223.4

Russell 1000 Valuation Dashboard

Russell 1000 is trading at a statistically elevated 34.8x 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

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