Updated: Nov 15, 2019
The price-earnings ratio, also known as P/E ratio, P/E, or PER, is the ratio of a company's share (stock) price to the company's earnings per share. The ratio is used for valuing companies and to find out whether they are overvalued or undervalued. This link gives you both a short-term and long-term perspective on the stock market S&P 500 P/E value. Note that, based on long-term averages, the current P/E is high but since 2000 the averages have gradually been declining. One way to interpret this is that stock prices have appreciated more slowly overall than the growth in company earnings. Please note that the standard S&P 500 P/E is calculated using the four previous quarterly earnings. On the other hand, the Shiller P/E, also known as CAPE, is calculated using the average of the previous 10 years quarterly earnings. The recent Shiller CAPE average is considerably higher than the 1 year P/E S&P 500 averages.