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S&P 500 Forward P/E Ratio Hits 19.0 For the First Time Since 2002


By John Butters  |  February 21, 2020

On February 19, the S&P 500 closed at a record-high value of 3386.15. Based on this closing price, the forward 12-month P/E ratio for the S&P 500 on that date was 19.0. Given the high values driving the “P” in the P/E ratio, how does this 19.0 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 19.0 on February 19 was above the four most recent historical averages for the S&P 500: five-year (16.7), 10-year (14.9), 15-year (14.6), and 20-year (15.5). In fact, this marked the first time the forward 12- month P/E had been equal to (or above) 19.0 since May 23, 2002 (19.1). However, it is important to note that even at 19.0, 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, nine sectors had forward 12-month P/E ratios on February 19 that exceeded their 20-year averages, led by the Utilities (21.4 vs. 14.5), Consumer Discretionary (23.7 vs. 17.8), and Materials (19.0 vs. 14.0) sectors. The only sector with a forward 12-month P/E ratio below its 20-year average on that date was the Energy sector (16.7 vs. 17.0). 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 (February 20, 2019), the forward 12-month P/E ratio was 16.2. Over the following 12 months (February 20, 2019 to February 19, 2020), the price of the S&P 500 increased by 21.6%, while the forward 12-month EPS estimate increased by 4.1%. Thus, the increase in the “P” has been the main driver of the increase in the P/E ratio over the past 12 months.

It is interesting to note that analysts were projecting record-high EPS for the S&P 500 of $175.97 in CY 2020 and $195.88 in CY 2021 on February 19. If not, the forward 12-month P/E ratio would have been higher than 19.0.

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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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