The P/E ratio (trailing 12 month) of the S&P 500 is currently at 16.64. We have to go all the way back to October 1995 to see a ratio this low (16.02 on 10/26/95). Below is a chart of the S&P 500 and its P/E ratio going back to 1995. As we have shown before, the PE ratio on the S&P 500 has contracted more than in any other economic recovery.
The current trailing P/E ratio is in line with the long-term average. However, in order to be an average there have to be an equal number of cases where the P/E is lower as it is higher. The problem is, in 1995 the P/E passed 16.64 on the way up. We believe it is now passing average on the way down.
Wake us when we get the lowest P/E since 1982, which is when the last expansion period began.
PE Ratio 95-present: