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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:

Industry Average P/E ratio Number of companies
Advertising Agencies 14.05 23
Aerospace & Defense 31.97 52
Agricultural Inputs 24.2 11
Airlines 15.14 11
Aluminum 29.23 4
Apparel Manufacturing 17.19 16
Apparel Retail 16.76 29
Asset Management 13.68 77
Auto Parts 17.77 43
Auto & Truck Dealerships 14.05 13
Banks - Diversified 16.59 6
Banks - Regional 14.14 284
Beverages - Non-Alcoholic 27.96 12
Biotechnology 21.33 489
Broadcasting 12.45 14
Building Materials 24.99 8
Building Products & Equipment 24.23 27
Business Equipment & Supplies 22.47 7
Capital Markets 19.54 36
Chemicals 15.01 18
Communication Equipment 28.52 42
Computer Hardware 19.45 25
Consulting Services 25.06 17
Credit Services 14.03 43
Diagnostics & Research 28.2 60
Discount Stores 31.16 8
Drug Manufacturers - General 26.96 12
Drug Manufacturers - Specialty & Generic 19.99 43
Education & Training Services 20.9 17
Electrical Equipment & Parts 25.84 41
Electronic Components 44.32 32
Electronic Gaming & Multimedia 11.98 7
Electronics & Computer Distribution 18.85 6
Engineering & Construction 29.94 30
Entertainment 31.27 37
Farm & Heavy Construction Machinery 20.64 21
Farm Products 16.3 15
Financial Data & Stock Exchanges 26.6 11
Food Distribution 31.17 9
Footwear & Accessories 14.07 11
Furnishings, Fixtures & Appliances 17.62 21
Gambling 17.08 8
Gold 27.49 29
Grocery Stores 21.61 10
Healthcare Plans 16.02 11
Health Information Services 51.86 33
Home Improvement Retail 25.53 7
Household & Personal Products 22.8 26
Industrial Distribution 29.69 17
Information Technology Services 28.2 52
Insurance Brokers 25.73 12
Insurance - Diversified 12.15 12
Insurance - Life 12.69 14
Insurance - Property & Casualty 15.23 37
Insurance - Reinsurance 12.96 7
Insurance - Specialty 12.51 17
Integrated Freight & Logistics 23.09 14
Internet Content & Information 33.47 41
Internet Retail 27.35 24
Leisure 23.89 24
Lodging 23.38 9
Marine Shipping 8.63 24
Medical Care Facilities 21.32 39
Medical Devices 34.55 93
Medical Distribution 25.49 6
Medical Instruments & Supplies 34.9 43
Metal Fabrication 27.19 12
Mortgage Finance 16.71 17
Oil & Gas E&P 12.83 60
Oil & Gas Equipment & Services 15.89 47
Oil & Gas Midstream 15.51 34
Oil & Gas Refining & Marketing 20.59 17
Packaged Foods 23.08 42
Packaging & Containers 23.12 18
Personal Services 19.95 10
Pollution & Treatment Controls 26.74 10
Publishing 22.16 7
Railroads 17.96 8
Real Estate - Development 10.94 9
Real Estate Services 30.99 24
Recreational Vehicles 17.11 14
REIT - Diversified 27.65 20
REIT - Healthcare Facilities 34.19 17
REIT - Hotel & Motel 33.4 15
REIT - Industrial 27.67 16
REIT - Mortgage 19.13 39
REIT - Office 47.41 23
REIT - Residential 30.67 18
REIT - Retail 29.2 23
REIT - Specialty 33.69 16
Rental & Leasing Services 16.64 19
Residential Construction 9.04 20
Resorts & Casinos 19.89 16
Restaurants 25.39 43
Scientific & Technical Instruments 32.45 23
Security & Protection Services 18.14 14
Semiconductor Equipment & Materials 30.85 25
Semiconductors 40.96 64
Software - Application 46.13 180
Software - Infrastructure 32.49 95
Solar 23.65 14
Specialty Business Services 27.38 26
Specialty Chemicals 26.02 44
Specialty Industrial Machinery 28.76 77
Specialty Retail 22.38 38
Staffing & Employment Services 24.29 23
Steel 23.71 13
Telecom Services 20.69 32
Thermal Coal 10.2 8
Tobacco 22.96 5
Tools & Accessories 23.73 10
Travel Services 22.69 10
Trucking 28.8 12
Utilities - Diversified 18.77 15
Utilities - Regulated Electric 19.7 24
Utilities - Regulated Gas 18.29 14
Utilities - Regulated Water 21.26 13

As shown in the table, the Health Information Services industry has the highest average P/E ratio of 51.86, followed by REIT - Office at 47.41. In contrast, the Marine Shipping industry has the lowest average P/E ratio of 8.63, followed by the Residential Construction industry at 9.04. 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 51.86 33
REIT - Office 47.41 23
Software - Application 46.13 180
Electronic Components 44.32 32
Semiconductors 40.96 64
Medical Instruments & Supplies 34.9 43
Medical Devices 34.55 93
REIT - Healthcare Facilities 34.19 17
REIT - Specialty 33.69 16
Internet Content & Information 33.47 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
Marine Shipping 8.63 24
Residential Construction 9.04 20
Thermal Coal 10.2 8
Real Estate - Development 10.94 9
Electronic Gaming & Multimedia 11.98 7
Insurance - Diversified 12.15 12
Broadcasting 12.45 14
Insurance - Specialty 12.51 17
Insurance - Life 12.69 14
Oil & Gas E&P 12.83 60

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.