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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 Jul 2025:

IndustryAverage P/E ratioNumber of companies
Advertising Agencies13.5523
Aerospace & Defense32.852
Agricultural Inputs23.2311
Airlines15.9911
Aluminum29.324
Apparel Manufacturing16.6816
Apparel Retail16.6429
Asset Management14.0176
Auto Parts15.4643
Auto & Truck Dealerships12.8613
Banks - Diversified16.496
Banks - Regional14.22284
Beverages - Non-Alcoholic28.6412
Biotechnology21.77486
Broadcasting12.5814
Building Materials24.458
Building Products & Equipment22.6227
Business Equipment & Supplies21.197
Capital Markets20.1836
Chemicals14.8518
Communication Equipment28.2842
Computer Hardware19.5925
Consulting Services27.4317
Credit Services13.7143
Diagnostics & Research26.2359
Discount Stores30.578
Drug Manufacturers - General21.4912
Drug Manufacturers - Specialty & Generic19.7443
Education & Training Services20.6917
Electrical Equipment & Parts22.3941
Electronic Components44.8732
Electronic Gaming & Multimedia11.777
Electronics & Computer Distribution18.136
Engineering & Construction31.2130
Entertainment31.4137
Farm & Heavy Construction Machinery19.520
Farm Products15.7615
Financial Data & Stock Exchanges27.6611
Food Distribution32.229
Footwear & Accessories14.8511
Furnishings, Fixtures & Appliances17.8521
Gambling17.928
Gold27.0629
Grocery Stores21.6410
Healthcare Plans13.8711
Health Information Services49.5932
Home Improvement Retail24.067
Household & Personal Products25.6226
Industrial Distribution29.5817
Information Technology Services27.0652
Insurance Brokers25.612
Insurance - Diversified12.2411
Insurance - Life12.3914
Insurance - Property & Casualty15.0337
Insurance - Reinsurance12.937
Insurance - Specialty12.0317
Integrated Freight & Logistics22.0814
Internet Content & Information32.5941
Internet Retail28.1724
Leisure24.0724
Lodging23.569
Marine Shipping9.324
Medical Care Facilities2039
Medical Devices32.7893
Medical Distribution24.956
Medical Instruments & Supplies33.1443
Metal Fabrication26.412
Mortgage Finance16.3617
Oil & Gas E&P12.5260
Oil & Gas Equipment & Services15.2546
Oil & Gas Midstream15.5134
Oil & Gas Refining & Marketing20.4817
Packaged Foods23.5642
Packaging & Containers24.5618
Personal Services19.4310
Pollution & Treatment Controls27.5110
Publishing20.867
Railroads17.418
Real Estate - Development10.569
Real Estate Services30.524
Recreational Vehicles16.3114
REIT - Diversified26.9820
REIT - Healthcare Facilities34.6317
REIT - Hotel & Motel3315
REIT - Industrial26.9516
REIT - Mortgage18.8339
REIT - Office46.6923
REIT - Residential30.8818
REIT - Retail28.9523
REIT - Specialty33.3816
Rental & Leasing Services16.3319
Residential Construction8.7720
Resorts & Casinos20.4516
Restaurants24.243
Scientific & Technical Instruments32.4723
Security & Protection Services18.214
Semiconductor Equipment & Materials30.7725
Semiconductors41.4664
Software - Application45.88179
Software - Infrastructure32.5595
Solar23.5614
Specialty Business Services27.5526
Specialty Chemicals25.8244
Specialty Industrial Machinery29.0377
Specialty Retail22.2338
Staffing & Employment Services24.0323
Steel23.1212
Telecom Services24.2832
Thermal Coal10.38
Tobacco23.395
Tools & Accessories24.1910
Travel Services24.2510
Trucking27.312
Utilities - Diversified18.1415
Utilities - Regulated Electric20.9524
Utilities - Regulated Gas18.6214
Utilities - Regulated Water20.4713

As shown in the table, the Health Information Services industry has the highest average P/E ratio of 49.59, followed by REIT - Office at 46.69. In contrast, the Residential Construction industry has the lowest average P/E ratio of 8.77, followed by the Marine Shipping industry at 9.3. 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.

IndustryAverage P/E ratioNumber of companies
Health Information Services49.5932
REIT - Office46.6923
Software - Application45.88179
Electronic Components44.8732
Semiconductors41.4664
REIT - Healthcare Facilities34.6317
REIT - Specialty33.3816
Medical Instruments & Supplies33.1443
REIT - Hotel & Motel3315
Aerospace & Defense32.852

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.

IndustryAverage P/E ratioNumber of companies
Residential Construction8.7720
Marine Shipping9.324
Thermal Coal10.38
Real Estate - Development10.569
Electronic Gaming & Multimedia11.777
Insurance - Specialty12.0317
Insurance - Diversified12.2411
Insurance - Life12.3914
Oil & Gas E&P12.5260
Broadcasting12.5814

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.