Price-to-Earnings Ratio by Sector

The price-to-earnings ratio is a company’s current share price divided by its earnings per share. A high price-to-earnings ratio suggests that a stock’s market price is high compared to its earnings. This could imply the stock is overvalued or that investors expect the stock to grow in the near future. A low price-to-earnings ratio could suggest the opposite. The energy and materials sectors, each highly sensitive to shifts in the economy and global politics, have the highest median price-to-earnings ratios.