Here is the latest update for September 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.
The average stock got a little cheaper in August with the TTM PE Ratio falling to 21 from 21.5. It is now just above the long-term average in the 61st percentile.
Using current year earnings estimates, valuations also fell from a PE of 18.1 to 17.6. They are also slightly above their long run average.
The Price/Sales is the one metric where the median stock continues to look very expensive, though valuations fell slightly for the month here too. Higher than normal profit margins are making stocks look more expensive relative to sales.
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