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PE ratio by industry

When it comes to analyzing and evaluating stocks, one of the most commonly used metrics is the price-to-earnings (P/E) ratio. The PE ratio helps investors assess a stock's value relative to its earnings. However, the average PE ratio can vary significantly between different industry sectors.

First, let's define the P/E ratio. The P/E ratio is calculated by dividing a company's stock price by its earnings per share (EPS).

Price to Earnings Ratio = Stock Price / TTM Earnings Per Share (EPS)

This ratio shows how much investors are willing to pay for each dollar of earnings the company generates. A high P/E ratio indicates that investors expect strong future growth, while a low P/E ratio suggests investors are less optimistic about the company's future prospects.

Average P/E Ratio by Industry

The average P/E ratio varies significantly by industry. Here is a table showing average PE ratios by industries in the US as of Jun 2025:

Industry Average P/E ratio Number of companies
Advertising Agencies 12.99 23
Aerospace & Defense 30.68 52
Agricultural Inputs 23.49 11
Airlines 13.71 11
Aluminum 26.37 4
Apparel Manufacturing 15.44 16
Apparel Retail 17.08 29
Asset Management 12.96 77
Auto Parts 14.78 44
Auto & Truck Dealerships 13.32 13
Banks - Diversified 15.12 6
Banks - Regional 12.9 286
Beverages - Non-Alcoholic 27.01 12
Biotechnology 21.24 493
Broadcasting 11.86 14
Building Materials 23.15 8
Building Products & Equipment 22.07 28
Business Equipment & Supplies 19.67 7
Capital Markets 18.51 36
Chemicals 14.32 18
Communication Equipment 26.31 43
Computer Hardware 17.59 25
Consulting Services 23.99 17
Credit Services 13.06 43
Diagnostics & Research 27.25 60
Discount Stores 30.32 8
Drug Manufacturers - General 26.14 12
Drug Manufacturers - Specialty & Generic 19.14 43
Education & Training Services 21.1 17
Electrical Equipment & Parts 23.97 41
Electronic Components 41.5 32
Electronic Gaming & Multimedia 11.23 7
Electronics & Computer Distribution 17.63 6
Engineering & Construction 28.4 30
Entertainment 29.91 38
Farm & Heavy Construction Machinery 18.91 21
Farm Products 15.78 15
Financial Data & Stock Exchanges 25.83 11
Food Distribution 29.58 9
Footwear & Accessories 12.49 11
Furnishings, Fixtures & Appliances 15.82 21
Gambling 15.8 10
Gold 24.73 29
Grocery Stores 21.67 10
Healthcare Plans 17.94 11
Health Information Services 50.34 32
Home Improvement Retail 23.45 7
Household & Personal Products 24.25 26
Industrial Distribution 27.22 17
Information Technology Services 26.73 52
Insurance - Diversified 11.94 12
Insurance - Life 12.55 14
Insurance - Property & Casualty 14.9 37
Insurance - Reinsurance 12.91 7
Insurance - Specialty 12.3 17
Integrated Freight & Logistics 21.43 14
Internet Content & Information 32.2 41
Internet Retail 27.09 24
Leisure 22.51 24
Lodging 21.65 9
Marine Shipping 8.59 24
Medical Care Facilities 21.35 39
Medical Devices 33 93
Medical Distribution 25.71 6
Medical Instruments & Supplies 34.66 43
Metal Fabrication 25.35 12
Mortgage Finance 16.31 17
Oil & Gas E&P 13.59 61
Oil & Gas Equipment & Services 14.9 47
Oil & Gas Midstream 14.53 34
Oil & Gas Refining & Marketing 20.14 17
Packaged Foods 23.82 42
Packaging & Containers 23.61 18
Personal Services 19.52 10
Pollution & Treatment Controls 25.15 10
Publishing 26.8 7
Railroads 16.57 8
Real Estate - Development 16.32 10
Real Estate Services 29.76 25
Recreational Vehicles 15.56 14
REIT - Diversified 27.57 20
REIT - Healthcare Facilities 33.96 17
REIT - Hotel & Motel 31.94 15
REIT - Industrial 27.52 16
REIT - Mortgage 18.82 39
REIT - Office 41.71 23
REIT - Residential 31.33 18
REIT - Retail 28.97 23
REIT - Specialty 28.47 16
Rental & Leasing Services 15.41 19
Residential Construction 8.15 20
Resorts & Casinos 21.04 16
Restaurants 23.48 43
Scientific & Technical Instruments 36.86 23
Security & Protection Services 17.07 14
Semiconductor Equipment & Materials 27.31 25
Semiconductors 37.89 64
Software - Application 45.43 181
Software - Infrastructure 30.89 95
Solar 21.22 14
Specialty Business Services 27.93 26
Specialty Chemicals 23.87 44
Specialty Industrial Machinery 26.72 77
Specialty Retail 21.52 38
Staffing & Employment Services 23.42 23
Steel 21.7 13
Telecom Services 23.03 32
Thermal Coal 9.68 8
Tobacco 23.5 5
Tools & Accessories 22.14 10
Travel Services 20.5 10
Trucking 26.12 12
Utilities - Diversified 18.51 15
Utilities - Regulated Electric 19.51 24
Utilities - Regulated Gas 18.16 14
Utilities - Regulated Water 21.07 13

As shown in the table, the Health Information Services industry has the highest average P/E ratio of 50.34, followed by Software - Application at 45.43. In contrast, the Residential Construction industry has the lowest average P/E ratio of 8.15, followed by the Marine Shipping industry at 8.59. This variation is due to several factors, including industry-specific risks, growth potential, and investor sentiment.

Industries with highest PE ratio

Industries with the highest PE ratio are shown in the following chart and table. You can further filter the industries by sector in the chart below, so you can see a breakdown of the top industries with the highest PE ratio for every sector.

Industry Average P/E ratio Number of companies
Health Information Services 50.34 32
Software - Application 45.43 181
REIT - Office 41.71 23
Electronic Components 41.5 32
Semiconductors 37.89 64
Scientific & Technical Instruments 36.86 23
Medical Instruments & Supplies 34.66 43
REIT - Healthcare Facilities 33.96 17
Medical Devices 33 93
Internet Content & Information 32.2 41

Industries with lowest PE ratio

Industries with the lowest PE ratio are presented in the following chart and table. Within the chart below, you can also refine the industries by sector, allowing you to observe a breakdown of the top industries with the lowest PE ratio in each sector.

Industry Average P/E ratio Number of companies
Residential Construction 8.15 20
Marine Shipping 8.59 24
Thermal Coal 9.68 8
Electronic Gaming & Multimedia 11.23 7
Broadcasting 11.86 14
Insurance - Diversified 11.94 12
Insurance - Specialty 12.3 17
Footwear & Accessories 12.49 11
Insurance - Life 12.55 14
Banks - Regional 12.9 286

It's important to compare the P/E ratio of a company to the average P/E ratio for its industry. If a company's P/E ratio is higher than the industry average, it may indicate that investors have high expectations for the company's growth potential. Conversely, if a company's P/E ratio is lower than the industry average, it may suggest that investors are less optimistic about the company's future prospects and therefore are willing to pay lower multiple for it.

Industry Sectors and Characteristics

Some industries tend to have higher P/E ratios than others because they are expected to have higher growth potential and future earnings. On the other hand, industries with lower growth potential or with more mature companies tend to have lower P/E ratios.

There are several industry sectors, each with unique characteristics that impact the P/E ratio. For example:

  • Technology companies often have higher P/E ratios due to the potential for rapid growth and innovation.
  • Healthcare companies often have lower P/E ratios due to regulatory risks and high research and development costs.
  • Consumer goods companies typically have moderate P/E ratios due to the steady demand for their products.

Other factors that can impact P/E ratios include interest rates, inflation, and macroeconomic trends. High interest rates or inflation can reduce the value of future earnings, causing P/E ratios to decline. Economic recessions or other negative macroeconomic events can also impact P/E ratios across industries.

Types of PE ratio

The P/E ratio is a relative comparison between a company's current stock price and its earnings per share (EPS). There are different types of P/E ratios that can be used depending on the timeline of stock price consideration. The first type is the forward P/E ratio, which compares current earnings to future earnings by estimating what the future earnings might look like.

The second type is the trailing twelve months P/E ratio, which uses EPS data from the past 12 months to judge a company's current performance.

The third type is the absolute P/E ratio, which uses current stock price and data from both the past 12 months and future projections.

Lastly, the relative P/E ratio compares the absolute P/E ratio to P/E values of the past, using a time frame set by investors.

It's important to note that while each type of P/E ratio has its own strengths and weaknesses, investors should consider multiple factors beyond P/E ratios when making investment decisions.

Limitations of P/E Ratio

While the P/E ratio is a useful metric, it has some limitations. It's important to note that P/E ratios should not be used as the sole factor when making investment decisions. Investors should consider a range of factors, such as a company's financial health, management team, growth potential, and industry trends, when assessing the value of a company and make more informed investment decisions.