Average PE Ratio by Industry — 2026 Benchmarks

PE ratios vary wildly across sectors — airlines at 7x, software at 35x. This table gives you the average, median, and range for 22 industry groups so you can instantly tell whether a stock's multiple is cheap, expensive, or in line with its peers.

Average PE ratios by industry sector — 2026 estimates. Click any column header to sort.
Sector	Avg PE ▼	Median PE	Range	Note
Software	35x	32x	22x – 60x	Recurring revenue and high margins command premium valuations.
REITs	35x	30x	18x – 55x	PE is misleading for REITs — use P/FFO instead. Shown for comparison.
Biotech	30x	25x	12x – 80x	Wide range reflects pipeline binary outcomes.
Technology	28x	26x	18x – 45x	Cloud and AI tailwinds keep multiples elevated despite rate pressure.
Semiconductors	25x	23x	14x – 40x	Cyclical but structurally higher on AI chip demand.
Retail	24x	22x	14x – 40x	E-commerce leaders trade at 35x+; traditional retail at 12–15x.
Healthcare	22x	20x	14x – 35x	Stable demand with pharma and device mix driving spread.
Consumer Staples	22x	21x	16x – 30x	Defensive premium for recession-resistant cash flows.
Aerospace & Defense	22x	21x	15x – 32x	Long-cycle contracts and geopolitical tailwinds sustain premiums.
Consumer Discretionary	20x	18x	12x – 35x	Wide dispersion — luxury trades at 30x, auto parts at 12x.
Media & Entertainment	20x	18x	10x – 35x	Streaming losses drag averages; legacy media trades at 10–12x.
Industrials	19x	18x	12x – 28x	Infrastructure spending and reshoring support mid-cycle multiples.
Pharmaceuticals	18x	16x	10x – 28x	Patent cliffs and generics competition compress multiples.
Utilities	18x	17x	13x – 24x	Bond proxies — PE moves inversely with interest rates.
Telecom	14x	13x	8x – 22x	Capex-heavy with slow growth; dividend yield matters more than PE.
Insurance	13x	12x	8x – 20x	Predictable float income but catastrophe exposure caps upside.
Automotive	12x	10x	5x – 25x	Cyclical and capital-intensive; EV makers inflate the average.
Banks	11x	10x	7x – 16x	Interest rate sensitivity and credit risk keep multiples low.
Energy	10x	9x	5x – 18x	Commodity cyclicality makes earnings volatile and multiples low.
Mining & Metals	10x	9x	5x – 18x	Commodity prices drive earnings — PE is most useful at mid-cycle.
Oil & Gas	8x	7x	4x – 15x	Peak-cycle earnings depress trailing PE; forward PE is higher.
Airlines	7x	6x	3x – 14x	Thin margins and fuel exposure make this the lowest-multiple sector.

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How to Interpret PE Ratio by Sector

The price-to-earnings ratio is the most widely cited valuation metric in equity markets — and the most commonly misused. A PE ratio tells you how many dollars investors are paying for each dollar of current earnings. Technology trades at 28x on average; utilities trade at 18x. That gap is not random. It encodes the market's expectations for growth, margin durability, and reinvestment returns.

Growth drives the premium. Technology companies at 28x are priced for 15–20% annual earnings growth over the next several years. At that growth rate, today's 28x PE becomes a 14x PE on earnings three years from now — a reasonable price for a high-margin, asset-light business. Utilities at 18x are priced for 3–5% earnings growth, which matches their regulated rate base expansion. Both multiples can be "fair" simultaneously because they reflect fundamentally different earnings trajectories.

Stability commands its own premium. Consumer staples trade at 22x — higher than their growth rate alone would justify. The extra multiple compensates for predictability. Companies like Procter & Gamble or Coca-Cola deliver steady earnings through recessions, which makes their cash flows more bondlike. Investors pay more per dollar of earnings when those earnings are unlikely to disappear. Cyclical sectors like energy (10x) and airlines (7x) trade at deep discounts precisely because their earnings are volatile and can swing 50%+ in a single year.

Capital intensity matters. A software company earning $1 per share may need $0.05 in capex to sustain that earnings power. An oil company earning $1 per share may need $0.40 in maintenance capex. The software dollar is worth more because more of it converts to free cash flow. This is why software trades at 35x while oil & gas trades at 8x — the headline earnings per share are not comparable on a quality-adjusted basis.

The right comparison is always within sector, not across sectors. A bank at 11x PE is not "cheaper" than a software company at 35x. They are different asset classes priced on different fundamentals. The useful question is whether that bank's 11x is above or below the sector median of 10x, and whether the premium is justified by better asset quality, higher ROE, or faster loan growth. Compare PE ratios horizontally (within industry) and over time (against the company's own history), never vertically across unrelated sectors.

Watch the earnings denominator. PE ratios are only as reliable as the "E." Cyclical companies often show their lowest PE at peak earnings — right before profits fall. Biotech averages 30x but the median is 25x because a handful of pre-revenue companies with minimal earnings inflate the average. Always check whether you are looking at trailing earnings, forward estimates, or normalized mid-cycle earnings. The number changes the story completely.

When a High PE Is Justified vs When It's a Warning Sign

Justified: Accelerating revenue with expanding margins

A software company at 40x PE with revenue growing 35% and operating margins expanding from 20% to 30% is earning its multiple. The current PE overstates the true cost because earnings are on a steep upward slope. Example: CrowdStrike traded at 50x+ during its hyper-growth phase and still delivered strong returns as earnings caught up to the price.

Warning: High PE on decelerating growth

A company trading at 35x PE while revenue growth slows from 30% to 15% to 8% is a classic derating setup. The market is still pricing in the old growth rate. When the next earnings report confirms the slowdown, the PE compresses — often violently. Peloton's collapse from 100x+ PE is the extreme case, but milder versions happen every earnings season.

Warning: Low PE at peak-cycle earnings

An oil company at 5x PE after a commodity supercycle looks cheap — until you realize earnings are 3x their normal level. As oil prices normalize, earnings fall and the PE ratio rises even as the stock price drops. The cheapest-looking cyclical stocks are often the most expensive on a mid-cycle basis. Check where current margins sit vs. the 10-year average before trusting a low PE.

Justified: Sector premium for defensive cash flows

Consumer staples at 22x and aerospace & defense at 22x both look expensive against the S&P 500 average. But these sectors have delivered earnings through every recession in the past 30 years. The premium is insurance against drawdown — investors accept a lower earnings yield in exchange for not losing 40% in a bear market. This premium is rational for portfolios that prioritize capital preservation.

Common questions

PE ratio — answered directly.

What is a good PE ratio?

There is no universal good PE ratio — it depends entirely on the sector and growth profile. A PE of 15x is expensive for a commodity producer growing at 3%, but cheap for a software company growing revenue at 30%. Compare against sector medians (shown above) and the company's own history rather than using a single cutoff number. The S&P 500 long-run average of 15–18x is a useful anchor, but individual sectors deviate significantly.

What is the average PE ratio of the S&P 500?

The S&P 500 trailing PE ratio has historically averaged around 15–18x over the past century. As of early 2026, it trades near 22–24x, reflecting the heavy weight of high-multiple technology and growth stocks in the index. The Shiller CAPE (cyclically adjusted PE using 10-year average earnings) sits around 33–35x, well above its long-term average of ~17x. Both measures suggest the market is pricing in above-average earnings growth or lower-than-average discount rates.

Why do tech stocks have higher PE ratios?

Technology companies trade at higher PE ratios because the market prices in faster earnings growth, higher margins, and asset-light business models. A software company reinvesting in R&D today may have depressed current earnings but rapidly expanding future earnings — the PE reflects that forward trajectory. Tech at 28x average PE means investors expect 15–20% earnings growth, which is roughly double the S&P 500 average. When growth disappoints, these multiples compress violently.

Is a low PE ratio always good?

No. A low PE ratio can signal genuine value — or it can be a value trap. Cyclical companies (energy, mining, airlines) often show their lowest PE ratios at the peak of the earnings cycle, right before profits decline. A bank at 7x PE may be pricing in credit losses. A retailer at 10x may be losing market share. Always check why the PE is low: is the market wrong about earnings, or is the market pricing in a real deterioration that the trailing PE doesn't yet reflect?

How do you compare PE ratios across industries?

Never compare PE ratios across industries without adjusting for growth rates, capital intensity, and cyclicality. A utility at 18x and a software company at 35x may both be fairly valued relative to their fundamentals. The PEG ratio (PE divided by earnings growth rate) is one way to normalize — a PEG near 1.0 suggests the PE is in line with growth. Also compare within sectors using the median PE (not the average, which outliers can skew) and check where the company sits in its own PE range over the past 5–10 years.

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