Published November 2, 2026 · by Troels Højbjerg, Founder
The P/E ratio is the share price divided by the company's earnings per share over the last twelve months. A P/E of 26 means you pay $26 for each $1 the company earned in a year.
Of the 199 US stocks WallStreetBuys covers, 124 have a P/E above zero. The middle one is 26.1. A quarter of them are under 16, and a quarter are over 44. I split them by sector to see how much the sector matters:
| Sector | Stocks with a P/E | Middle P/E |
|---|---|---|
| Basic Materials | 7 | 11.1 |
| Financial Services | 18 | 15.1 |
| Communication Services | 10 | 17.9 |
| Consumer Cyclical | 11 | 21.0 |
| Energy | 7 | 22.3 |
| Technology | 41 | 31.5 |
| Industrials | 14 | 37.2 |
| Healthcare | 12 | 38.3 |
Source: own calculation on the P/E in our database on November 2, 2026, for the 199 US stocks we cover (one with a data error left out). Only sectors with at least 7 stocks that have a P/E. Three sectors with fewer are not shown.
A P/E of 20 is cheap for a healthcare stock in this group and expensive for a materials stock. So a P/E says more when you read it against the stock's own sector than against the whole market.
A P/E needs earnings. When a company has none, or our data has no figure, the P/E is stored as zero and the stock page shows none. That is 75 of the 199 stocks. Next to them I put the stocks that do have a P/E, in four bands, and checked what happened over the following three months:
| P/E at the start | Stocks | Start points | Median change after 3 months | Median biggest drop along the way | Fell more than 20% at some point |
|---|---|---|---|---|---|
| Under 15 | 30 | 180 | +7.1% | −6.5% | 12% |
| 15 to 25 | 69 | 428 | +2.4% | −7.2% | 10% |
| 25 to 40 | 73 | 428 | +2.7% | −7.7% | 16% |
| Over 40 | 69 | 536 | −1.5% | −13.8% | 30% |
| No P/E | 81 | 686 | −8.4% | −22.4% | 56% |
| All stocks | 188 | 2,258 | +0.2% | −11.6% | – |
Source: own calculation on 188 of the US stocks we cover. A start on the first Monday of each month from July 2025 to August 2026 (14 dates), then about three months ahead. A stock can sit in more than one band over time, so the stocks do not add up. Closing prices and the P/E of each day from our database. Windows with an unadjusted stock split are left out.
The bands under 40 look much alike. The break comes above 40, and it is biggest for the stocks with no P/E: more than half of those start points saw a drop of 20% or more along the way. A low P/E was not what made the difference. A P/E under 40 simply meant the company was earning money.
I also compared each stock with the middle P/E of its own sector on the same day. Among the stocks that have a P/E, 723 start points were below their sector's middle and 771 were above:
| P/E compared with own sector | Start points | Median change after 3 months | Median biggest drop | Fell more than 20% |
|---|---|---|---|---|
| Below the sector's middle | 723 | +4.1% | −7.3% | 13% |
| Above the sector's middle | 771 | −0.2% | −12.1% | 25% |
Source: same calculation. The sector is the stock's sector today. Only dates and sectors with at least 5 stocks that have a P/E.
This is the same pattern as before: the pricier half dropped more. It does not tell you the cheaper stock will rise. A low P/E can also mean the market expects earnings to fall.
A P/E says nothing about how sound the company is or where the share price is heading. So I did the same calculation for the three scores on every stock page: value, quality and momentum. Each is a ranking from 0 to 100 against all the stocks we cover. I split the stocks that have a P/E into thirds:
| Score | Third | Start points | Median biggest drop | Fell more than 20% |
|---|---|---|---|---|
| Quality | Weakest | 99 | −16.3% | 35% |
| Middle | 561 | −9.7% | 20% | |
| Strongest | 912 | −7.8% | 16% | |
| Value | Weakest | 96 | −14.5% | 40% |
| Middle | 1,004 | −9.6% | 21% | |
| Strongest | 472 | −7.3% | 11% | |
| Momentum | Weakest | 328 | −14.2% | 29% |
| Middle | 564 | −7.8% | 16% | |
| Strongest | 680 | −7.6% | 16% |
Source: same calculation, limited to the 1,572 start points (129 stocks) where the stock had a P/E. The weakest thirds of quality and value are small samples (99 and 96 start points, 23 and 20 stocks). Thirds: scores 0 to 33, 34 to 66 and 67 to 100.
For momentum, the strongest third and the middle third were about equal. The weakest third is where the big drops were. In this data, a low momentum score worked as a warning, and a high one was not a clear reason to buy.
Over all 2,258 start points, including the stocks with no P/E, the weakest thirds look far worse (a median biggest drop of 18% to 22%). That is mostly the same stocks: 668 of the 764 weakest value start points are stocks with no P/E. A company with no earnings scores low on value and, in most cases, on quality too.
Growth stocks are the ones where the market pays a high price for earnings it expects later. A high P/E is the closest thing I can measure. Stocks with a P/E over 40 had a median biggest drop of 13.8% over three months, against 6.5% to 7.7% for the three bands below.
That is 15 months in which pricier stocks fell harder. It is not proof that growth stocks are worse. In another period the result can be the opposite, and I have not tested that.
A good P/E is one that fits the stock's sector and comes from real earnings. Across the 124 US stocks we cover that have a P/E, the middle is 26, but it runs from 11 in materials to 38 in healthcare. In my data since July 2025, stocks with a P/E under 40 had a median biggest drop of 6.5% to 7.7% over three months. Above 40 it was 13.8%, and for the stocks with no P/E it was 22.4%. Inside a sector, the half with the lower P/E held up better than the half with the higher one (a drop of 7.3% against 12.1%). Quality and value showed the same direction, and momentum did so only for the weakest third. With 15 months of data, I would treat all of this as a direction and not as a rule.
One thing to check: look up the P/E of a stock you own, then compare it with the middle P/E of its sector in the table above.
The P/E, the three scores and the signal are free on every stock page, with no sign-up. You can start with the best stocks list or look up a term in the glossary.
It depends on the sector, and on whether the company earns anything at all. Across the 124 US stocks we cover that have earnings, the middle P/E is 26. Materials sit around 11 and healthcare around 38. Since July 2025, stocks with a P/E under 40 had a median biggest drop of 6.5% to 7.7% over three months. Above 40 it was 13.8%, and for stocks with no P/E it was 22.4%. A P/E tells you what you pay for the earnings. It does not tell you whether the price is fair.
I do not give trading instructions, so I can only tell you what I measured. Momentum is a ranking of how strongly a share price is trending. In my data on US stocks since July 2025, the third of stocks with the weakest momentum had the biggest drops over the next three months (a median of 14.2%). The strongest third and the middle third were about equal (7.6% and 7.8%). In that data, momentum worked better as a warning than as a buy trigger.
Look at three things: how much the company earns on what it owns, how much of each dollar of sales is left as profit, and a nine-point health check of its accounts. The quality score on every WallStreetBuys stock page combines these, ranked from 0 to 100 against all the stocks we cover. Stocks in the top third of quality had a median biggest drop of 7.8% over three months, against 16.3% in the bottom third. The bottom third is a small sample.
I cannot say which is better. We have a value score but no growth score. As a stand-in, I looked at stocks with a P/E above 40, the kind of price the market pays for expected growth. Since July 2025 they had a median biggest drop of 13.8% over three months, against 6.5% to 7.7% for stocks with a P/E under 40. That is one 15-month period, and it does not show that growth stocks lose in general.
Read also: How to compare two stocks · How to find undervalued stocks · Best stocks for the long term · Glossary · Methodology
This is information, not individual investment advice. The numbers are our own calculations on market data and may contain errors. Past results are no guarantee of the future. You decide for yourself — and remember to spread your risk.