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Highest Forward 12-Month P/E Ratio for S&P 500 Since 2002


By John Butters  |  January 29, 2020

On January 17, the value of the S&P 500 closed at a record-high value of 3329.62. Based on this closing price, the forward 12-month P/E ratio for the S&P 500 on that date was 18.7. Given the high values driving the “P” in the P/E ratio, how does this 18.7 P/E ratio compare to historical averages? What is driving the increase in the P/E ratio?

The forward 12-month P/E ratio of 18.7 on January 17 was above the four most recent historical averages for the S&P 500: 5-year (16.7), 10-year (14.9), 15-year (14.5), and 20-year (15.5). In fact, this marked the first time the forward 12-month P/E had been equal to (or above) 18.7 since May 28, 2002 (also 18.7). However, it is important to note that even at 18.7, the forward 12-month P/E ratio was still well below the peak P/E ratio (of the past 20 years) of 24.4 recorded on March 24, 2000.

S&P 500 Forward 12-Month PE Ratio

At the sector level, 10 sectors had forward 12-month P/E ratios on January 17 that exceeded their 20-year averages, led by the Utilities (20.5 vs. 14.4), Consumer Discretionary (22.6 vs. 17.8), and Materials (18.4 vs. 14.0) sectors. A 20-year average P/E ratio is not available for the Real Estate sector.

S&P 500 Sector Level Forward 12-Month PE Ratios

One year prior (January 18, 2019), the forward 12-month P/E ratio was 15.5. Over the following 12 months (January 18, 2019 to January 17, 2020), the price of the S&P 500 increased by 24.7%, while the forward 12-month EPS estimate increased by 3.8%. Thus, the increase in the “P” has been the main driver of the increase in the P/E ratio over the past 12 months.

The current forward 12-month P/E ratio is 18.6 (based on the closing price and forward 12-month EPS estimate on January 23). The index also had a forward 12-month P/E ratio of 18.6 on January 16, January 21, and January 22. However, prior to January 16, the last time the forward 12-month P/E ratio was equal to 18.6 was May 31, 2002.

It is interesting to note that analysts are projecting record-high EPS of $177.41 for the S&P 500 for CY 2020. If not, the forward 12-month P/E ratio would be even higher than the current 18.6.

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John Butters

Vice President, Senior Earnings Analyst

Mr. John Butters is Vice President and Senior Earnings Analyst at FactSet. His weekly research report, “Earnings Insight,” provides analysis and commentary on trends in corporate earnings data for the S&P 500 including revisions to estimates, year-over-year growth, performance relative to expectations, and valuations. He is a widely used source for the media and has appeared on CNBC, Fox Business News, and the Business News Network. In addition, he has been cited by numerous print and online publications such as The Wall Street Journal, The Financial Times, The New York Times, MarketWatch, and Yahoo! Finance. Mr. Butters has over 15 years of experience in the financial services industry. Prior to FactSet in January 2011, he worked for more than 10 years at Thomson Reuters (Thomson Financial), most recently as Director of U.S. Earnings Research (2007-2010).


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