2022-04-21

P/E RATIO FOR EQUITIES

IN THE NAME OF ALLAH THE MOST GRACIOUS THE MOST MERCIFUL
The P/E ratio for equities is near 20x, but it's hard to see it staying that high. This chart shows “P/E bands” based on historical and expected earnings. At a 20x multiple and 10% expected EPS growth, the S&P 500 is worth around 5000. At 18x it’s 4500, and at 16x it’s 4000.