S&P 500 PE Ratio - How the Price Earnings Ratio Helps You to Valuate the Companies in the
Standard and Poor 500
When it comes to determining if the current valuation of the overall stock market is expensive
or cheap, the price-to-earnings ratio of the S&P 500 is one of the oldest and most frequently used
The chart1 below shows that a S&P 500 PE Ratio below 10 is cheap and
above 20 is expensive.
How to Calculate the S&P 500 PE Ratio
To calculate a single company's price earnings ratio you have to divide the company's current share price
by its last year's earnings per share. To calculate the S&P 500 PE ratio you have to make a
list of all the companies in the standard and poor 500 and add all their individual share prices and all their last
year's earnings per share to make the same calculation. Of course, this is far too much work. Fortunately, I found
a website on which you can see today's S&P 500 price earnings ratio, just see the note at the bottom
of this page.
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