S&P 500 Forward P/E Ratio Falls to Three-Year Low of 17.7

The forward price-to-earnings ratio for the S&P 500 dropped to 17.7 on November 5, marking its lowest reading since November 1, 2023, when the multiple stood at 17.5. FactSet data showed the figure was based on an index closing value of 7,353.73 and expected 12-month earnings per share of $415.82.

The decrease places the multiple below its five-year average of 19.8 and its ten-year average of 19.1. It stays above the 15-year average of 17.6, the 20-year average of 16.5, and the 25-year average of 16.4. At the close of 2025, the index traded at a forward multiple of 22.0. Since that date, the benchmark has added 7.4 percent, while estimated forward 12-month earnings per share grew by 33.6 percent.

Sector valuations and earnings growth

Valuation shifts varied across industries. On November 5, Information Technology and Energy stood as the only two sectors priced below their 25-year average forward multiples. Technology traded at 17.3 against its long-term average of 20.0, hitting its lowest multiple since March 2020. Energy traded at 11.7 against an average of 13.9.

FactSet reported on November 6 that 88 percent of S&P 500 components had published third-quarter figures, with 84 percent beating earnings per share projections. That beat rate exceeds the five-year average of 78 percent and the ten-year average of 77 percent. Total profits topped forecasts by 2.7 percent, trailing the five-year average outperformance of 7.5 percent and the ten-year average of 8.0 percent.

Blended third-quarter profit growth reached 31.4 percent, up from 29.1 percent at the close of September. All 11 sectors recorded higher earnings compared to the prior year, led by Energy, Information Technology, and Materials. Revenue increased by a blended 14.3 percent, up from 12.2 percent recorded at the end of the quarter.

FactSet figures showed bottom-up earnings per share projections for the fourth quarter grew 1.4 percent between September 30 and October 29 to $94.79. Over the last five years, analysts have reduced fourth-quarter figures by an average of 1.1 percent during the opening month. Fourth-quarter expectations for Energy rose 20.3 percent, while Consumer Staples forecasts dropped 4.0 percent. The full-year earnings per share projection advanced 0.6 percent during October to $363.94.

Historical multiples and price action

Prior downturns produced lower ratios through falling share prices. On May 12, 2022, the forward multiple reached 16.6 as the index dropped 17.5 percent from January 3, even while forward profit estimates increased 6.1 percent. During the March 2020 pandemic onset, the multiple decreased to 13.1. In the 2008 financial crisis, the index valuation touched a low of 8.6.

A November 11 technical review by Reuters showed the index fell around 4 percent from its October peak, approaching its 200-day moving average at 7,331. Reuters reported that a move under this level opens support between 7,237 and 7,313, followed by a range from 7,080 to 6,900. On the upside, a climb past 7,578 leads to the 100-day moving average at 7,620, while clearing 7,715.57 would break the run of lower highs.