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
Financial Services	24.0	18.5	17.3	1.35%	30.2%	361
Healthcare	74.0	38.8	28.1	0.15%	15.2%	456
Technology	40.8	18.8	19.0	0.87%	15.2%	269
Communication Services	10.1	22.8	6.7	2.51%	11.6%	84
Industrials	33.5	20.4	14.7	1.07%	7.9%	221
Consumer Cyclical	24.9	12.8	12.5	1.05%	5.7%	187
Real Estate	18.5	18.5	18.2	6.74%	4.1%	122
Utilities	19.3	15.1	11.8	3.94%	3.9%	24
Energy	18.2	13.2	9.5	2.67%	3.2%	74
Consumer Defensive	20.9	14.0	10.9	1.10%	1.7%	77
Basic Materials	64.6	25.4	14.6	1.11%	1.4%	62

#	Ticker	Company	Sector	P/E	Fwd P/E
1	LGCL	Lucas GC Limited Ordinary Shares	Technology	0.0	—
2	XNET	Xunlei Limited	Communication Services	0.1	—
3	TKLF	Tokyo Lifestyle Co., Ltd.	Consumer Defensive	0.1	—
4	XYF	X Financial	Financial Services	0.2	0.3
5	UCL	uCloudlink Group Inc.	Communication Services	0.2	26.1
6	MHUA	Meihua International Medical Technologies Co., Ltd.	Healthcare	0.2	—
7	TWG	Top Wealth Group Holding Limited Ordinary Shares	Consumer Defensive	0.2	—
8	CLSKW	CleanSpark, Inc.	Financial Services	0.2	—
9	AREN	The Arena Group Holdings, Inc.	Communication Services	0.4	1.9
10	AIV	Apartment Investment and Management Company	Real Estate	0.5	—

#	Ticker	Company	Sector	P/E	Fwd P/E
1	SHO	Sunstone Hotel Investors, Inc.	Real Estate	265.2	37.8
2	TTI	TETRA Technologies, Inc.	Energy	276.6	24.4
3	FBYD	Falcon's Beyond Global, Inc. Class A Common Stock	Industrials	306.6	—
4	VERX	Vertex, Inc.	Technology	307.3	15.0
5	GYRE	Gyre Therapeutics, Inc.	Healthcare	314.7	—
6	ACR	ACRES Commercial Realty Corp.	Real Estate	319.9	32.9
7	KOPN	Kopin Corp.	Technology	334.2	—
8	IBTA	Ibotta, Inc.	Technology	341.3	—
9	NCNO	nCino, Inc.	Technology	382.4	21.1
10	ESOA	Energy Services of America Corporation	Industrials	496.1	19.2

Russell 2000 Valuation Dashboard

Russell 2000 is trading at 24.1x earnings, aligned with historical norms.

Russell 2000 is near its 10-year average

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 2000

10 Most Discounted (Lowest P/E)

10 Most Elevated (Highest P/E)

Frequently Asked Questions

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