The table below presents the current and historical Price-to-Earnings (P/E) ratio and Cyclically Adjusted Price-to-Earnings (CAPE) ratio for the Nikkei 225 index. As of January 1, 2025, the trailing P/E ratio of the Nikkei 225 stands at 15.72, while the CAPE ratio is 26.14. The Nikkei 225 is one of Japan’s most widely recognized stock market indices, tracking the performance of the largest and most actively traded companies listed on the Tokyo Stock Exchange (TSE). It serves as a key benchmark for the Japanese equity market.

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Nikkei 225 Index: P/E (TTM), EPS (TTM) & CAPE

* EPS (earnings per share) in the table above has been indexed to start from the base value of “100” in 1/1/2020.

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About the Nikkei 225 Index:

• Index Composition: The Nikkei 225 index consists of 225 selected companies from various sectors of the Japanese economy. These companies are considered representative of the overall market and are chosen based on factors such as market capitalization, trading volume, and industry representation. The index has a long history, dating back to its inception in 1950. It has been used as a barometer of the Japanese stock market’s performance and has gained international recognition as an indicator of Japan’s economic health.
• Weighting: The index is price-weighted, meaning that companies with higher stock prices have a greater impact on the index’s movements. This is in contrast to market-cap-weighted indices, where companies with larger market capitalizations have a higher influence. This is why the TOPIX (Tokyo Stock Price Index) index is these used as a more accurate representation of the Japanese equity marekt. NOTE: Siblis Reserach is calculating the P/E ratio of the index using the following formula: “Total market capitalization of all companies part of an index divided by the total trailing 12-month earnings (net income) of the companies. Negative earnings are included in the calculation.”
• Sector Representation: Th Nikkei 225 is heavily weighted toward technology and industrial sectors. As the index is price-weighted rather than market-cap weighted, certain industries may have a greater influence on index movements based on the price of individual stocks rather than the overall market capitalization of a sector.