The S&P 500 forward P/E ratio is 20.1 as of June 26, 2026, which is above the 5-year average of 19.9 and the 10-year average of 19.0 [1]. That is elevated but not extreme: the same ratio reached 23.1 in late October 2025, the highest reading in more than five years [3]. The index closed at 7,354.02 on June 26, about 7.4% above its 2025 year-end level of 6,845.50 and 3.4% below the record close of 7,609.78 set on June 2 [2]. The short answer is that the market is priced for strong earnings growth, and the valuation case rests on whether that growth arrives.
Where the S&P 500 forward P/E stands versus history
FactSet calculates the forward 12-month P/E by dividing the index price by the aggregate earnings estimate for the next four quarters. On June 26 the ratio was 20.1, up from 19.7 at the end of the first quarter on March 31 [1]. Since March 31 the price of the index has risen 12.7%, while the forward 12-month EPS estimate has risen 10.4% [1]. In other words, most of the rally since the first-quarter low has been earned by higher profit estimates rather than by multiple expansion.
The comparison with late 2025 is instructive. On October 29, 2025, the forward P/E was 23.1, and FactSet noted that the last time the ratio was above 23.0 was September 2, 2020 [3]. From April 8 to October 29, 2025, the index price rose 38.3% while the forward EPS estimate rose only 7.1% [3]. The first quarter of 2026 corrected part of that gap: the index fell from 6,845.50 on December 31, 2025 to 6,528.52 on March 31, 2026, a decline of 4.6% [2], while estimates kept rising. The result is a market that is roughly three multiple points cheaper on forward earnings than it was eight months ago.
The 20-to-23 range in context
A forward P/E of 20.1 implies an earnings yield of about 5.0% (the inverse of the multiple). Over the last decade the average multiple of 19.0 implied an earnings yield near 5.3% [1]. The difference is modest. What has changed is the growth that analysts expect: for calendar year 2026 they project earnings growth of 24.0% and revenue growth of 11.2%, followed by 16.8% earnings growth and 7.7% revenue growth in calendar year 2027 [1]. A 20 multiple on earnings growing more than 20% is a different proposition from a 20 multiple on earnings growing 5%.
Why earnings estimates are rising into the second quarter
The estimated year-over-year earnings growth rate for Q2 2026 is 23.1%, up from 18.8% on March 31 [1]. Analysts normally cut estimates during a quarter, so an increase of this size is unusual. Revenue growth for the quarter is projected at 12.3%, which would be the highest revenue growth rate for the index since 2022 [1]. Company guidance supports the trend:
- 48 S&P 500 companies have issued negative EPS guidance for Q2 2026 and 63 have issued positive EPS guidance [1].
- The share of companies issuing positive guidance is 57% (63 of 111), well above the 5-year average of 41% and the 10-year average of 41% [1].
- 44 of the 63 companies with positive guidance, or 70%, are in the Information Technology sector [1].
- For Q3 and Q4 2026, analysts project earnings growth of 26.7% and 24.2% [1].
The concentration of positive guidance in technology matters for valuation. The index-level multiple is an average of sectors with very different growth and pricing. A large part of the expected earnings increase comes from a small group of companies tied to artificial intelligence infrastructure, and a shortfall there would move the index multiple more than a shortfall in any other sector.
Which sectors are expensive and which are cheap
At the sector level, FactSet reports that Industrials (26.0) and Consumer Discretionary (24.9) have the highest forward 12-month P/E ratios, while Energy (12.6) and Financials (15.0) have the lowest [1]. The spread of more than 13 points between the most and least expensive sectors is wider than the gap between the index and its own history. Investors who consider the index expensive may consider that the premium is concentrated rather than broad.
Trailing multiples tell a similar story. DataPorium's sector P/E series for Nasdaq-listed companies, which uses reported rather than estimated earnings, shows the following averages as of June 26, 2026 [4]:
| Sector | Trailing P/E, June 26, 2026 |
|---|---|
| Consumer Cyclical | 76.5 |
| Technology | 44.4 |
| Consumer Defensive | 36.9 |
| Real Estate | 31.2 |
| Basic Materials | 30.2 |
| Industrials | 29.7 |
| Utilities | 27.4 |
| Communication Services | 23.5 |
| Healthcare | 23.4 |
| Financial Services | 18.8 |
| Energy | 16.7 |
Trailing P/E ratios run higher than forward ratios when earnings are growing quickly, because the denominator has not yet caught up. The gap between a trailing multiple in the mid-40s for technology and a forward multiple in the 20s for the index is a direct measure of how much earnings growth the market has already priced in. Readers can track the daily series on DataPorium's stock market page [4].
What analysts expect from here
The bottom-up target price for the S&P 500, built by aggregating median analyst targets for each constituent, was 8,918.27 on June 25, which was 21.2% above the closing price of 7,357.49 [1]. All 11 sectors are expected to see price increases of 10% or more, led by Communication Services (+32.4%), Consumer Discretionary (+26.6%) and Information Technology (+26.5%), with Industrials (+10.2%) and Real Estate (+10.5%) at the low end [1]. Analyst targets are usually optimistic, and the 21% figure should be read as a measure of sentiment rather than a forecast.
The more useful test is arithmetic. If calendar 2026 earnings grow 24.0% and calendar 2027 earnings grow 16.8% as projected [1], and the multiple simply stays at 20, the index would rise with earnings. If the multiple returns to the 10-year average of 19.0, the index would still rise, but by about five percentage points less. The downside case is a combination of slower growth and a lower multiple, which is what happened between October 2025 and March 2026.
A forward P/E of 20.1 is a premium to history that is fully explained by projected earnings growth above 20%, which makes the delivery of that growth, not the multiple itself, the main risk for the S&P 500.
Key takeaways
- The S&P 500 forward 12-month P/E is 20.1 as of June 26, 2026, above the 5-year average (19.9) and the 10-year average (19.0) but below the 23.1 reached in October 2025 [1][3].
- Since March 31 the index price is up 12.7% while forward EPS estimates are up 10.4%, so most of the rebound reflects higher earnings expectations [1].
- Analysts project 24.0% earnings growth for calendar 2026 and 16.8% for 2027; 57% of companies issuing Q2 guidance were positive, most of them in technology [1].
- Sector multiples range from 12.6 (Energy) to 26.0 (Industrials) on a forward basis, so the premium is concentrated rather than uniform [1].
- The index closed at 7,354.02 on June 26, 3.4% below the June 2 record of 7,609.78 [2].
Frequently asked questions
What is the S&P 500 forward P/E ratio right now?
As of June 26, 2026, the forward 12-month P/E ratio for the S&P 500 is 20.1 according to FactSet, compared with a 5-year average of 19.9 and a 10-year average of 19.0 [1].
Is a forward P/E of 20 expensive for the S&P 500?
It is above the long-run average but below the 23.1 reached in October 2025. Whether it is expensive depends on earnings: analysts expect 24.0% earnings growth in 2026, and the multiple looks reasonable only if most of that growth is delivered [1][3].
Which S&P 500 sectors have the highest and lowest forward P/E?
Industrials (26.0) and Consumer Discretionary (24.9) have the highest forward 12-month P/E ratios, while Energy (12.6) and Financials (15.0) have the lowest as of June 26, 2026 [1].
How much has the S&P 500 gained in 2026 so far?
The index closed at 7,354.02 on June 26, 2026, up about 7.4% from 6,845.50 at the end of 2025, after falling 4.6% in the first quarter and rebounding in the second [2].
