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. The year 2022 was terrible for the U.S equities and the CAPE multiples of most of the sectors decreased considerably compared to the beginning of the year. The main exception were Energy companies that clearly outperformed all other industries. The overall CAPE of the U.S. stock market as a whole is currently 24.84 (December 31st, 2022).
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CAPE Ratio by Sector (Large Cap U.S. Companies)
| GICS Sector | 12/31/2022 | 6/30/2022 | 12/31/2021 | 6/30/2021 | 12/31/2020 |
|---|---|---|---|---|---|
| Communications | 20.23 | 25.57 | 41.28 | 44.90 | 40.51 |
| Consumer Discretionary | 25.73 | 28.67 | 45.83 | 43.35 | 41.28 |
| Consumer Staples | 23.69 | 23.58 | 26.81 | 25.32 | 25.62 |
| Energy | 31.71 | 27.02 | 20.64 | 18.42 | 11.63 |
| Financials | 17.21 | 16.77 | 23.22 | 24.43 | 21.30 |
| Health Care | 27.95 | 27.96 | 33.45 | 32.14 | 30.77 |
| Industrials | 24.73 | 22.73 | 29.07 | 29.18 | 25.69 |
| Information Technology | 34.42 | 37.70 | 56.94 | 52.68 | 50.06 |
| Materials | 23.79 | 24.00 | 31.89 | 30.43 | 27.69 |
| Real Estate | 32.52 | 37.69 | 51.66 | 47.35 | 41.24 |
| Utilities | 21.35 | 22.74 | 21.04 | 21.73 | 21.83 |
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.
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.