S&P forward P/E sits near 22x
- FactSet’s latest earnings update puts the S&P 500 on a 20.9 forward P/E in early May 2026, not 22x, as Q1 results keep beating. - The telling detail is the move from 19.7 at March 31 to 20.9 now, even with 84% of reporters beating EPS estimates. - That leaves stocks expensive versus history — and more exposed if earnings momentum cools or rates stop helping.
Stocks are expensive again. That is the simple version. The more useful version is that the S&P 500 is not quite sitting at 22x forward earnings right now — the cleaner, widely watched read from FactSet is 20.9x in early May 2026. That is still high. And it matters because the market got there even as earnings estimates and actual results have been improving, which tells you investors are still paying up for growth. (factset.com) ### What does “forward P/E” actually mean? It is just the index price divided by expected earnings over the next 12 months. So if the S&P 500 rises faster than profit forecasts, the multiple goes up. If earnings forecasts rise faster than the index, the multiple comes down. People watch it because it is the quickest shorthand for how much optimism is already baked in. (execbolt.com) ### So is the number 22x wrong? Basically, it is too high for the most current broad-market read. Goldman used 22x in a 2026 outlook piece, framing that as matching the 2021 peak and approaching the 2000 extreme. But the live FactSet earnings-season data now shows 20.9x, and another market data series has been (execbolt.com) — but not the same number. (goldmansachs.com) ### Why does 20.9x still matter? Because it is above both recent norms. FactSet’s current reading is higher than the 5-year average of 19.9 and the 10-year average of 18.9. It is also up from 19.7 at the end of the first quarter. In other words, valuation got richer in (goldmansachs.com)delivering. (factset.com) ### Wait — aren’t earnings beating? Yes, and by a lot. FactSet says 63% of the S&P 500 had reported Q1 2026 results as of May 1, and 84% beat EPS estimates. The aggregate surprise was 20.7% above estimates — far above normal. That is the interesting part of this story. The multiple is elevated even though the earnings backdrop has been strong, not weak. (insight.factset.com) ### Then why are investors still nervous? Because a high multiple changes the penalty for disappointment. Think of it like buying a great company at a premium price — you can still make money, but there is less room for a stumble. If inflation runs hotter, bond yields stay high, or earn(insight.factset.com)to decide 20.9x is too generous. That is the multiple-contraction risk people mean. (factset.com) ### Is this bubble territory? Not necessarily. Goldman’s own framing was that 22x would match the 2021 peak and still sit below the roughly 24x extreme reached around 2000. Yardeni’s 2026 range also leaves room for the market to trade between 18x and 22x depending on how resilient earnings stay. So this is better read as “priced for good news” than “obvious mania.” (goldmansachs.com) ### What should readers actually watch next? Watch the two moving pieces inside the ratio. First, forward EPS estimates — if analysts keep lifting them, a high index level can look less stretched. Second, rates — because expensive equities usually look more fragile when(goldmansachs.com)that looked manageable can suddenly look crowded. (insight.factset.com) ### Bottom line The real story is not that the S&P 500 is at 22x today. It is that the best current read is a still-rich 20.9x, and the market has stayed expensive even after a strong earnings season. That is bullish in one sense — investors still believe the growth story. But it also means the bar is high now. (factset.com)
