On November 5, the forward 12-month P/E ratio for the S&P 500 was 17.7. This forward 12-month P/E ratio was based on a closing price of 7353.73 and a forward 12-month EPS estimate of $415.82. How does this 17.7 P/E ratio compare to historical averages? What is driving the recent decrease in the P/E ratio?
The forward 12-month P/E ratio of 17.7 on November 5 was below the 5-year average of 19.8 and below the 10-year average of 19.1. In fact, this marked the lowest forward 12-month P/E ratio recorded bv the index since November 1, 2023 (17.5).
However, it is important to note that this forward 12-month P/E ratio was still above the 15-year (17.6), 20-year (16.5), and 25-year (16.4) averages. It is also well above the lowest forward 12-month P/E ratio recorded by the index over the past 25 years of 8.6 on November 20, 2008.
At the sector level, six sectors had forward 12-month P/E ratios on November 5, 2026, that were below their 5-year averages and six sectors had forward 12-month P/E ratios that were below their 10-year averages. However, only two sectors had forward 12-month P/E ratios on that date that were below their 25-year averages: Information Technology (17.3 vs. 20.0) and Energy (11.7 vs. 13.9). For the Information Technology sector, this marked the lowest forward 12-month P/E ratio recorded by the sector since March 23, 2020 (16.1).
What is driving the decline in the forward 12-month P/E ratio for the S&P 500? At the start of the year (December 31, 2025), the forward 12-month P/E ratio for the S&P 500 was 22.0. Since the start of the year, the price of the S&P 500 has increased by 7.4%, while the forward 12-month EPS estimate increased by 33.6%. Thus, the increase in the “E” has been the main driver of the decrease in the P/E ratio since the start of the year.
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