Calculate trailing PE, forward PE, and PEG ratio. See how any stock's valuation compares to the S&P 500 and sector averages.
How the market's valuation has shifted over the past two decades. The long-term average PE is approximately 16-17.
Average PE ratios vary significantly by sector. Use this table to benchmark any stock against its industry peers.
| Sector | Avg PE | Median PE | PE Range | Typical Companies | Valuation Notes |
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A low PE does not automatically mean a stock is a bargain. Companies with declining earnings, heavy debt, or regulatory headwinds often trade at low PEs for good reason — these are called "value traps." Conversely, a high PE may be justified if a company is growing earnings rapidly. Always pair PE with the PEG ratio, which accounts for growth, and compare against sector averages rather than the broad market.
Trailing PE reflects the past, but stocks are priced on future expectations. A company that just had a bad quarter may show a misleadingly high trailing PE, while its forward PE (based on expected recovery) tells a more accurate story. The S&P 500 forward PE is typically 1-3 points lower than trailing PE because analysts expect earnings growth. When trailing and forward PE diverge significantly, it signals an inflection point worth investigating.
Peter Lynch popularized the PEG ratio as a way to compare companies with different growth profiles. A PEG of 1.0 means you're paying a fair price for growth. In practice, PEG under 1.0 is rare for quality companies — it usually appears during broad market selloffs or when a stock is temporarily out of favor. Most S&P 500 growth stocks trade at PEG ratios between 1.0 and 2.5. PEG above 3.0 generally signals overvaluation unless the company has a dominant competitive moat.
PE ratios are calculated using the standard formula: Stock Price ÷ Earnings Per Share. Trailing PE uses TTM (trailing twelve months) reported EPS. Forward PE uses consensus analyst estimates for the next 12 months. The PEG ratio divides PE by the expected annual EPS growth rate.
Sector average PE ratios are approximate values based on S&P 500 sector indices as of Q1 2026. Historical S&P 500 PE data represents trailing twelve-month earnings. All figures are for educational reference and may not reflect real-time market conditions.