title: "What Is a Good P/E Ratio? Average P/E by Industry (2026 Guide)" description: "A complete reference guide to P/E ratios by industry. Learn what's 'normal' for tech, healthcare, REITs, banks, and more — with real data tables and examples." keywords: ["good PE ratio", "PE ratio by industry", "average PE ratio", "price to earnings ratio", "what is a good PE ratio", "PE ratio explained", "stock valuation PE ratio"] date: "2026-03-06" author: "Poor Man's Stocks"

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What Is a Good P/E Ratio? Average P/E by Industry

"Is this stock expensive?"

That's the most common question every investor asks. And the most common answer — "check the P/E ratio" — is only useful if you know what a good P/E ratio looks like for that specific industry.

A P/E of 25 might be cheap for a tech company and wildly expensive for a utility stock. Without industry context, the P/E ratio is meaningless.

This guide gives you the context. Every number in the tables below is based on real market data as of early 2026.

Disclaimer: This article is for educational purposes only and does not constitute financial advice. P/E ratios are one of many metrics to consider when evaluating stocks.

P/E Ratio: A 30-Second Refresher

Price-to-Earnings Ratio = Stock Price ÷ Earnings Per Share (EPS)

A P/E of 20 means investors pay $20 for every $1 of annual earnings
Higher P/E = investors expect faster future growth (or the stock is overvalued)
Lower P/E = slower growth expected, mature company, or undervalued

The S&P 500 average P/E ratio is roughly 27.79 as of March 2026 (based on VOO's data). Historically, the long-term average is around 15-17.

Average P/E Ratios by Industry (2026)

Here's the reference table you've been looking for. These represent typical P/E ranges for each sector based on current market conditions:

Technology

| Sub-Industry | Typical P/E Range | Current Examples | |--------------|-------------------|-----------------| | Software (SaaS) | 30-60 | Salesforce ~28, Adobe ~32 | | Semiconductors | 20-45 | NVIDIA 37.42, AMD ~28 | | Big Tech (Mega-Cap) | 25-40 | Apple 33.01, Microsoft 25.70 | | Cybersecurity | 35-80 | CrowdStrike ~65, Palo Alto ~55 | | Consumer Electronics | 15-30 | Dell ~16, HP ~12 |

Why tech P/Es are high: Investors pay premiums for companies growing revenue 15-30%+ annually. A software company growing at 25% "deserves" a higher P/E than a bank growing at 5%.

Healthcare & Pharmaceuticals

| Sub-Industry | Typical P/E Range | Current Examples | |--------------|-------------------|-----------------| | Big Pharma | 12-22 | Johnson & Johnson ~18, Pfizer ~15 | | Biotech (profitable) | 15-35 | Amgen ~22, Gilead ~14 | | Medical Devices | 25-45 | Intuitive Surgical ~60, Stryker ~35 | | Health Insurance | 15-25 | UnitedHealth ~22, Cigna ~16 | | Biotech (pre-revenue) | N/A (negative earnings) | Use Price/Sales instead |

Watch out: Biotech companies often have no earnings. Use Price-to-Sales ratio or pipeline analysis instead of P/E.

Financial Services

| Sub-Industry | Typical P/E Range | Current Examples | |--------------|-------------------|-----------------| | Big Banks | 10-16 | JPMorgan ~13, Bank of America ~12 | | Regional Banks | 8-14 | US Bancorp ~11, PNC ~12 | | Insurance | 10-18 | Berkshire Hathaway ~10, Progressive ~17 | | Fintech | 20-50 | SoFi ~35, PayPal ~18 | | Asset Management | 12-20 | BlackRock ~22, T. Rowe Price ~12 |

Banks typically have low P/Es because they're mature, heavily regulated, and grow slowly. A bank at P/E 20 would be considered expensive; at P/E 8, potentially undervalued or in trouble.

Consumer Staples

| Sub-Industry | Typical P/E Range | Current Examples | |--------------|-------------------|-----------------| | Beverages | 22-30 | Coca-Cola ~28, PepsiCo ~21 | | Food & Grocery | 15-25 | Procter & Gamble ~27, General Mills ~15 | | Household Products | 20-30 | Colgate ~27, Clorox ~35 | | Tobacco | 8-14 | Altria ~10, Philip Morris ~18 |

Consumer staples command premium P/Es because they're recession-proof. People buy Coca-Cola and toothpaste regardless of the economy.

Energy

| Sub-Industry | Typical P/E Range | Current Examples | |--------------|-------------------|-----------------| | Oil Majors | 10-18 | ExxonMobil ~14, Chevron ~15 | | Exploration & Production | 6-15 | ConocoPhillips ~12, Devon ~9 | | Midstream/Pipelines | 10-16 | Enterprise Products ~11, Kinder Morgan ~15 | | Renewables | 25-60+ | Enphase ~40, First Solar ~20 |

Energy P/Es are tricky because earnings fluctuate wildly with oil prices. A P/E of 8 during high oil prices might actually mean the stock is expensive if oil drops.

Real Estate (REITs)

| Sub-Industry | Typical P/E Range | Current Examples | |--------------|-------------------|-----------------| | Net Lease REITs | 40-60 | Realty Income (O) 55.53 | | Data Center REITs | 50-100+ | Equinix ~75, Digital Realty ~90 | | Apartment REITs | 30-50 | AvalonBay ~35, Equity Residential ~40 | | Healthcare REITs | 25-45 | Welltower ~55, Ventas ~35 |

REIT P/Es look inflated because REITs have large depreciation charges that reduce reported earnings. The better metric for REITs is FFO (Funds From Operations) or AFFO. Realty Income's P/E of 55.53 looks scary, but its Price/FFO is closer to 15-16, which is reasonable.

Industrials

| Sub-Industry | Typical P/E Range | Current Examples | |--------------|-------------------|-----------------| | Aerospace & Defense | 20-35 | Lockheed Martin ~18, RTX ~30 | | Industrial Conglomerates | 15-25 | Honeywell ~23, 3M ~14 | | Shipping & Logistics | 12-22 | UPS ~18, FedEx ~16 | | Construction | 12-20 | Caterpillar ~17, Deere ~14 |

Utilities

| Sub-Industry | Typical P/E Range | Current Examples | |--------------|-------------------|-----------------| | Electric Utilities | 15-22 | NextEra ~25, Duke Energy ~19 | | Water Utilities | 25-40 | American Water Works ~30 | | Gas Utilities | 12-18 | Atmos Energy ~17 |

Utilities are bond proxies — investors buy them for stable dividends, not growth. P/Es above 22 are usually considered rich for utilities.

Telecommunications

| Sub-Industry | Typical P/E Range | Current Examples | |--------------|-------------------|-----------------| | Telecom Giants | 8-15 | AT&T (T) ~10, Verizon ~10 | | Wireless/5G | 12-20 | T-Mobile ~25 |

Telecom P/Es are consistently low because growth is minimal. These are income plays, not growth stocks.

The P/E Cheat Sheet

Here's the simplified version you can bookmark:

| Sector | "Cheap" P/E | "Fair" P/E | "Expensive" P/E | |--------|------------|-----------|-----------------| | Technology | Below 20 | 25-35 | Above 45 | | Healthcare | Below 12 | 15-25 | Above 35 | | Banks | Below 8 | 10-14 | Above 18 | | Consumer Staples | Below 18 | 22-28 | Above 35 | | Energy | Below 8 | 10-16 | Above 20 | | REITs | Use FFO, not P/E | | | | Utilities | Below 14 | 16-20 | Above 24 | | Industrials | Below 12 | 16-24 | Above 30 | | Telecom | Below 8 | 10-14 | Above 18 |

P/E Traps to Avoid

Trap #1: "Low P/E = Cheap Stock"

Not always. A P/E of 5 might mean the company's earnings are about to collapse (the "E" is artificially high). Ford's FY2025 operating loss is a perfect example — last year's earnings don't predict next year's.

Trap #2: "High P/E = Overvalued"

NVIDIA trades at 37.42x earnings. Is it overvalued? Revenue grew 65.5% last year. If that growth continues, today's "high" P/E will look cheap in hindsight. Growth justifies higher P/Es.

Trap #3: Comparing P/Es Across Industries

Apple's P/E of 33 vs. JPMorgan's P/E of 13 tells you nothing useful. They're in completely different industries with completely different growth profiles. Always compare P/E within the same sector.

Trap #4: Ignoring the "Forward P/E"

The standard P/E uses trailing 12-month earnings. The Forward P/E uses estimated future earnings. NVIDIA's trailing P/E is 37.42, but its forward P/E is 22.22 — a massive difference because analysts expect earnings to grow dramatically.

Always check both. Our Graham Number Calculator uses trailing data, but the forward P/E tells you where the market expects the company to go.

Better Metrics to Use Alongside P/E

P/E shouldn't be your only tool. Pair it with:

| Metric | What It Tells You | Best For | |--------|-------------------|----------| | PEG Ratio (P/E ÷ Growth Rate) | Whether the P/E is justified by growth | Growth stocks | | Price/Free Cash Flow | Whether the company generates real cash | All stocks | | EV/EBITDA | Valuation independent of capital structure | Comparing companies with different debt levels | | Price/Book | What you pay relative to net assets | Banks, insurance, REITs | | Dividend Yield | Cash return on your investment | Income stocks |

How to Use P/E in Practice

Find the industry average using the tables above
Compare the stock's P/E to its industry peers — not the broad market
Check the Forward P/E — is growth expected to bring it down?
Look at the PEG ratio — a PEG under 1.0 suggests the growth justifies the P/E
Use our Stock Screener to filter by P/E range within specific sectors

Free Tools for Valuation Analysis

Graham Number Calculator — Calculates Benjamin Graham's fair value based on EPS and book value
Stock Screener — Filter and sort stocks by P/E ratio, dividend yield, sector, and more
Dividend Calculator — Model income from dividend stocks you're analyzing

The Bottom Line

There is no universal "good" P/E ratio. Context is everything.

A P/E of 15 is expensive for a tobacco company and cheap for a SaaS company. A P/E of 30 might be a screaming buy if earnings are growing 40% annually, or a value trap if growth has stalled.

Use these industry tables as your starting point. Compare within sectors. Check the forward P/E. And never, ever make an investment decision based on P/E alone.

Data reflects market conditions as of March 2026. P/E ratios fluctuate with stock prices and earnings reports. This is not financial advice.

What Is a Good P/E Ratio? Average P/E by Industry (2026 Guide)