Here is the latest update for November from Validea’s market valuation tool. Rather than focusing on market-cap weighted indexes like the S&P 500, our tool focuses on the valuation of the average stock relative to history. We use the median of our investable universe of 2700 stocks to perform the calculation.
Despite the recent strong run in the market, the median stock in our database got less expensive in October as earnings have been coming in strong. The median TTM PE fell to 20.5 and is just slightly above its long-term average.
The current year PE ratio, however, rose to 19 and looks more expensive relative to history.
The Price/Sales is one metric where the median stock continues to look very expensive. Higher than normal profit margins are making stocks look more expensive relative to sales.
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