CAPE & P/E Ratios by Sector (U.S. Large Cap)

The table below lists the current & historical CAPE ratios by Sector, calculated using the 500 largest public U.S. companies. If the cyclically adjusted price-to-earnings ratio (CAPE) of a sector is lower than its historical average, this might indicate that the sector is currently undervalued and vice versa. Since the beginning of the year 2022, the CAPE multiples of most of the sectors have decreased considerably as the year has been terrible for the U.S equities. The main exception is Energy companies that have clearly outperformed all other industries. The overall CAPE of the U.S. stock market as a whole is currently 23.72 (September 30th, 2022).

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CAPE Ratio by Sector (Large Cap U.S. Companies)

GICS Sector 6/30/2022 12/31/2021 6/30/2021 12/31/2020 6/30/2020
Communications 25.57 41.28 44.90 40.51 34.85
Consumer Discretionary 28.67 45.83 43.35 41.28 34.32
Consumer Staples 23.58 26.81 25.32 25.62 22.86
Energy 27.02 20.64 18.42 11.63 10.74
Financials 16.77 23.22 24.43 21.30 17.64
Health Care 27.96 33.45 32.14 30.77 28.35
Industrials 22.73 29.07 29.18 25.69 20.28
Information Technology 37.70 56.94 52.68 50.06 42.46
Materials 24.00 31.89 30.43 27.69 21.97
Real Estate 37.69 51.66 47.35 41.24 41.27
Utilities 22.74 21.04 21.73 21.83 20.00

Need access to the full data? Check the Professional Subscription Plan to our Global Equity Valuations database that provides you the latest and historical P/E (TTM) ratios, P/B ratios, CAPE ratios, EV/EBITDA multiples and Dividend yields by Sector (calculated using the top 500 U.S. companies) since the year 1979, including valuation data of the major global equity indices. Check a sample dataset from here.

EV/EBITDA Enterprise Multiple

Cyclically Adjusted P/E & Sector Performance

Can the CAPE ratio be used to predict what will be the future performance of a specific sector? In a white paper published by Barclay’s research department and Professor Shiller (to promote the new ETN/Exchange Traded Note created by the bank), the group developed a sector rotation strategy that outperformed annual returns of the S&P 500 total return index with nearly 4%. The returns are promising but it is always easy to beat the market using historical data. Time will tell if the CAPE ratio remains a useful indicator in the future.

In February 2015, Ossiam launched an exchange traded fund (The Ossiam Shiller Barclays Cape Europe Sector Value) that revolves around European equities following the same strategy described in the paper. The ETF is traded on the London Stock Exchange.

Comparing the valuations of different Sectors using CAPE

The CAPE ratios varies substantially between the sectors. In December 2021, the cyclically adjusted P/E of the Technology sector was three times higher than the ratio of Energy companies and Utilities. Does this mean that the investors are blind to see how overvalued the tech stocks are at the moment?

Comparing the valuations of different industries is tricky. Investors have different expectation for the timeframe of future earnings of different companies. For some new and hot high-tech firm, most of the company’s value is based on hopes of fast growth and the current earnings of the company do not really matter. But for mature firms, the retained earnings in short timeframe are much more important. The same holds true for industries as a whole: the expectations of when the money is coming in are not the same.

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