Stats › Valuation › P/E ratio
S&P 500 price to earnings ratio
The price to earnings ratio is the simplest valuation tool there is. Take the price, divide it by the profits, and you get how many dollars you're paying for each dollar the business earns. That's it. The complications all arrive with the second question, which is: earnings from when?
Because there's more than one honest answer. You can use the last twelve months of profits that actually happened, which gives a trailing P/E of 28.63. You can use the next twelve months that analysts expect, which gives a forward P/E of 20.1. Or you can use ten years of inflation adjusted earnings, which is CAPE. This page carries all three, along with the averages each one gets measured against, and a section on why those averages are doing more work in the argument than the ratios themselves.
That's really why the page exists. Depending on which version someone picks, the same market on the same day looks either 76% more expensive than its historical norm or about 6% more expensive than its recent one. Neither of those is a lie. Both are answers to slightly different questions, and most people quoting one has no idea the other exists. Two sources, both linked below with the dates they were read. If a number here matters to a decision you're making, go get it fresh from them yourself.
The S&P 500's trailing twelve month P/E is 28.63 against a long run mean of 16.23 and a median of 15.08. The forward twelve month P/E, using analyst estimates, is 20.1 against a five year average of 19.9 and a ten year average of 19.0. The trailing measure says the market is nearly twice its historical valuation. The forward measure says it is roughly normal. Both are correctly calculated, and the difference is almost entirely in what they are being compared against.
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Below this point there are 7 sections, 1 chart and 2 named sources, roughly 1150 words of it. Every figure carries the source it came from and the date the data is from.
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