S&P 500 P/E Ratio

16.20

Historical Mean

Average since 1871

15.06

Historical Median

Middle value

5.31

Minimum P/E Ratio

Lowest recorded

123.73

Maximum P/E Ratio

Highest recorded

3,468

If Returns to Mean

-49.9% change

3,224

If Returns to Median

-53.5% change

S&P 500 P/E Ratio Over Time

Data source: Historical U.S. equity data (1871–present), based on Robert J. Shiller’s reconstructed series (Yale University). Curated by Finanzapedia.

About P/E Ratio

The P/E ratio compares the S&P 500 price to trailing earnings per share. It is a measure of how much investors pay for each dollar of earnings.

Key Insights

Valuation Indicator: Higher P/E ratios generally indicate that investors expect higher earnings growth in the future
Market Timing: Historically, very high P/E ratios have preceded market corrections
Economic Cycles: P/E ratios tend to fluctuate with economic cycles and market sentiment
Long-term Average: The long-term average P/E ratio serves as a benchmark for market valuation

Conclusion

At 31.13, the P/E ratio is 92.2% higher than its historical average of 16.20. This suggests the market is pricing in a strong economic outlook, leaving little room for setbacks.

This premium can be partly explained by the long period of low interest rates, which has made equities appear relatively attractive. However, it also suggests that much of the good news may already be reflected in prices.

We believe this is a time for tempered expectations. Markets priced for perfection can be unforgiving when reality falls short.

Current Market Assessment

With a current P/E ratio of 31.13, the S&P 500 is trading at:

92.2% above the historical mean

106.7% above the historical median

Valuation Scenarios:

Current EPS: $214.07

Current Index Level: 6,926.55

At Mean P/E (16.20): 3,467.93

At Median P/E (15.06): 3,223.89

Research Methodology & Limitations

This analysis is produced by Finanzapedia's Team using publicly available historical data. Our assessments rely on quantitative frameworks and historical context to inform long-term valuation perspectives.

While we apply rigorous standards to ensure accuracy and consistency, past performance is not indicative of future results. Our ratings and commentary represent our independent opinion as of the date of publication and are not intended as investment advice or a recommendation to buy, sell, or hold any security.

Investors are solely responsible for their decisions and should perform their own due diligence, considering their risk tolerance, investment objectives, and financial circumstances.