Sector P / E Ratios

Many market participants continue to stress that estimated valuations for the market remains low, making equities attractive.  The problem is that these are estimates, and until the actual earnings come through, it's hard to go by analyst expectations, especially in this market environment.

While estimated valuations might be low, the trailing 12-month P/E ratio for the S&P 500 is not.  As shown below, the trailing P/E for the index is currently at 20.54, and just a couple of weeks ago, it had risen to its highest levels in years.  Even at 20.54, it is higher than it was when the market peaked in October.

Along with the S&P 500, we provide historical trailing P/E ratios for the nine major sectors.  We left Telecom out because its P/E is currently negative (not good).

Comments

[User 143167:]

US is the only equity market in the world with uptrend in P/E during the last 12 months. You may say it is also the one country who cut policy rates by 325 bps duirng the last 12 months. However, my conclusion is: this market is still overvalued in the long term.

2008 Jul 10 10:39 PM

[bbowen7:]

It is interesting that sometimes th conventional wisdom is correct. In an economy that is slowing down, avoid financials and consumer discretionary. And stay that way.

2008 Jul 12 09:32 AM