Three S&P 500 Sectors Trade Below Their Economic Book Value While S&P 500’s PEBV Regains 2019 Highs

Three S&P 500 Sectors Trade Below Their Economic Book Value While S&P 500’s PEBV Regains 2019 Highs

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This report analyzes[1] market cap, economic book value, and the price-to-economic book value (PEBV) ratio for the S&P 500 and each of its sectors.

I analyze other fundamental and valuation metrics for the S&P 500 and its sectors in these reports:









These reports leverage cutting-edge technology to provide clients with a cleaner and more comprehensive view of every measure of profits[2].



S&P 500 PEBV Ratio Jumps in 3Q20

The PEBV ratio for the S&P 500 rose from 1.1 at the end of 2019 to 1.6 through 11/17/2020 (the earliest date updated 10-Qs for the S&P 500 constituents were available). The S&P 500 PEBV ratio last reached this level in mid-2019, per Figure 1. This ratio compares the market's expected future profits to existing profits. At 1.6, the S&P 500's valuation implies the profits of the S&P 500 will increase 60% from current levels.



Three S&P 500 sectors trade below their economic book value (excluding Energy). More details below.

Figure 1: PEBV Ratio for the S&P 500 From December 2004 –