Sector Valuation
Map.
A market can look fairly priced while one corner of it is in a bubble, and an expensive-looking market can be one expensive sector. The market-wide gauges, like the Shiller CAPE below, tell you how stretched the average is. This page shows where: valuation, cash yield, margin of safety and profit quality for every sector, and how a bubble can build in one place and not in all.
Reading the market…
These four are what the Crash Indicator reads for the whole market: one number for hundreds of companies. They can say the market is expensive. They cannot say which part.
How the map is built
- Twelve sectors. The site's ~500 tracked stocks are grouped into the usual eleven sectors, with semiconductors kept apart from the rest of technology because that is where today's most stretched valuations are. The grouping is a judgement call (a few stocks, like the two homebuilders, are placed by hand) and every sector holds between 7 and 49 stocks.
- Medians, not averages. Each sector's reading is the median stock, so one outlier cannot move it. A sector needs at least four stocks with a value before a median is shown.
- Warm and cool are relative to the market. The colour compares each sector with the median of all tracked stocks, on whichever lens you choose. Warm (red, ▲) is pricier, hotter or weaker than the market's own middle; cool (blue, ▼) is cheaper or calmer. Every tile also prints its number.
- Six lenses. Price per dollar of profit (trailing P/E), free-cash-flow yield, margin of safety (the same neutral DCF as the stock card), profit quality (the Earnings Quality screen), the three-year price run, and how much the P/E itself has changed over three fiscal years.
- Size = share of market value among the tracked stocks, from each company's market cap.
What this can't do
- A warm tile is a question, not a verdict. Faster growth, fatter margins and lower interest rates all justify a higher multiple. A bubble is when the price assumes more than the profits can deliver, and nothing here can prove that in advance.
- It is a snapshot with a short memory. The data holds today's valuations and about three years of price and profit-per-share history, not a history of sector valuations, so it cannot say whether a sector is expensive against its own past.
- These are the large US stocks the site tracks, not the whole market. A sector's weight here is its weight in that set.
- The crash results use today's survivors only. Companies that failed or were bought before today are not in the data, so the losses shown are smaller than the real ones, most of all for the dot-com bust.
- Banks, insurers, REITs and regulated utilities have no cash yield or margin of safety here, because a free-cash-flow valuation doesn't fit how they report cash.
On Oct 23, 2026, across the 503 stocks this site tracks, Semiconductors has the highest median P/E at 42.5× against 24.0× for all tracked stocks, and Financials the lowest at 13.6×. A hot sector is a question, not a verdict: the map above adds cash yield, margin of safety, profit quality and how the price run split into profit and multiple.
Where Is
It Stretched?
Each tile is a sector, sized by its share of the tracked market's value. Switch the lens to change what the colour means, and click a tile for its numbers and its biggest stocks.
Drawing the map…
▲ hotter than the market · ● in line · ▼ cooler. Hatched tiles have no reading on this lens.
Where The Value Sits,
Where The Profit Sits.
In a fairly priced market each sector's slice of the value roughly matches its slice of the profits. A sector whose value share is well above its profit share is being paid for what it is expected to earn, not what it earns now. That gap is the first place a sector bubble shows.
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Value = market cap. Profit = market cap ÷ trailing P/E, for stocks with positive earnings (loss-makers hold value but earn nothing here). Shares are of the tracked stocks' totals.
Take A Sector
Out.
Switch a sector off and watch what happens to the market's valuation. The Crash Indicator's CAPE and forward P/E are averages of exactly this kind, so how much they lean on one sector matters.
Remove from the market
How A Bubble
Builds.
Sector bubbles tend to follow a similar path. It is not a forecast, and no two are identical, but each step leaves a measurable mark, and the map above is built to show those marks.
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A real change
A new technology, cheap credit, a shortage: something genuine lifts what one sector's companies might earn. Nothing is wrong yet, and the sector can deserve a higher price.
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Prices outrun profits
Investors extrapolate the good news. Price rises faster than profit per share, so the multiple paid for each dollar of profit expands.
Look at the Multiple change lens.
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The index feeds it
Index funds hold each company in proportion to its size, so the more a sector rises the bigger its slice of every fund, and every new dollar buys more of it.
Look at value against profit.
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New supply of the story
High prices make selling shares attractive: IPOs, share sales, acquisitions paid in stock, heavy stock pay. A sector issuing more than it returns in cash is still raising money on the story.
Look at shareholder yield.
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The average hides it
Other sectors are ordinary, so the market's headline number moves less than the hot sector's, or one huge sector drags the whole average up. Either way a market-wide gauge cannot say where.
Try take a sector out.
A high multiple is not a bubble.
A sector can be expensive for good reasons: faster growth, fatter margins, falling interest rates. What turns expensive into fragile is the combination: the multiple rising faster than profits, profit quality weakening, the biggest few names carrying the sector, and companies issuing more stock than they return in cash.
No single reading is the signal. Several at once are a reason to ask harder questions of that sector's stocks.
Why the Crash Indicator can't point.
The Crash Indicator's valuation gauges (CAPE, the Buffett indicator, the equity risk premium) measure how stretched the whole market is, and that matters for how much a fall could cost. But they are one number for hundreds of companies.
This map is the other half: the same stretch, resolved by sector. Read the Crash Indicator for how much risk; read this for where it sits.
What Happened
When It Broke.
The same stocks the home page's Stress Test replays, grouped into sectors. Every crash was a market-wide event, and every one hit the sectors very differently. That spread is the point: the market fell, but not evenly.
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Median result of the stocks in each sector that were trading at that peak, from the S&P 500's peak week; weekly closes, price only (no dividends). Survivorship matters: only companies still in the index today are here, so the true losses, especially in 2000–02, were larger. The S&P 500 bar is the index itself.
Which sectors look the most and least stretched right now?
On Oct 23, 2026, across the 503 stocks this site tracks, Semiconductors has the highest median P/E at 42.5× against 24.0× for all tracked stocks, and Financials the lowest at 13.6×. A hot sector is a question, not a verdict: the map above adds cash yield, margin of safety, profit quality and how the price run split into profit and multiple.
| Sector | Stocks | Median P/E | Median cash yield | Median margin of safety | Profit rated strong | 3-year price run | Share of value / profit |
|---|---|---|---|---|---|---|---|
| Semiconductors | 20 | 42.5× | 2.5% | -139% | 65% | +178% | 16% / 13% |
| Real Estate | 30 | 31.5× | n/a | n/a | 55% | +19% | 2% / 1% |
| Materials | 22 | 31.0× | 5.6% | -8% | 77% | +42% | 1% / 1% |
| Technology | 50 | 30.6× | 3.4% | -74% | 52% | +52% | 20% / 15% |
| Health Care | 60 | 29.0× | 4.7% | -24% | 90% | +37% | 10% / 7% |
| Industrials | 94 | 27.5× | 4.0% | -46% | 91% | +58% | 9% / 8% |
| Consumer Staples | 29 | 23.6× | 6.0% | +3% | 93% | +1% | 3% / 3% |
| Utilities | 31 | 21.2× | n/a | n/a | 84% | +43% | 2% / 3% |
| Consumer Discretionary & Retail | 52 | 20.6× | 4.6% | -28% | 87% | +46% | 12% / 10% |
| Communication Services | 17 | 18.8× | 5.3% | -11% | 71% | +48% | 10% / 14% |
| Energy | 21 | 17.2× | 6.5% | +9% | 75% | +36% | 4% / 5% |
| Financials | 77 | 13.6× | n/a | n/a | 78% | +73% | 12% / 20% |
Medians are shown only for sectors with at least four stocks with a value. A sector holding a bigger share of value than of profit is one the market is paying more for than its earnings explain. These are the large US stocks this site tracks, not the whole market. Read the Shiller CAPE for the same question at market level.
From this site's weekly screener, free-cash-flow, earnings-quality and filings data. Educational content only, not investment advice.
Frequently asked questions
What is the Sector Valuation Map?
A map of how stretched each of twelve sector groups looks across the large US stocks this site tracks, on six lenses: median P/E, cash yield, margin of safety, profit quality, the three-year price run and how much of that run came from a higher multiple instead of higher profit.
How are the twelve sectors defined?
They group the 38 narrower industry labels in the site's sector file into twelve broad sectors, with semiconductors kept apart from the rest of technology. Weights are weights within the tracked set, not the whole market.
How can one sector be in a bubble while the market looks calm?
A market-wide average blends cheap and expensive sectors. When one sector's multiple has risen far more than its profit, the average can look fine while that sector is stretched, which is why the map compares each sector with the market.
Why are some sectors missing a cash yield or margin of safety?
Banks, insurers, REITs and utilities are not valued on free cash flow, so those lenses are not shown for them. A median also needs at least four stocks with a value before it is displayed.
What are the limits of the map?
It covers about 500 large US stocks, not the whole market, shows today's snapshot plus the last few years, and the crash results use today's surviving companies only. A warm tile is a question to investigate, never a verdict.
About this sector valuation map
How expensive is each sector? This sector valuation map compares 12 sectors of the US stock market on median P/E ratio, free cash flow yield, margin of safety, profit quality, price run and multiple expansion, and replays four past market crashes by sector. It shows why a stock market bubble can build in one sector, such as technology or semiconductors, while the market as a whole looks calm. Read it with the stock market crash indicator. Then check your own mix in the Portfolio Doctor, or open any stock in the A to Z directory to see where it sits against its sector. See how the map is built. Read what a good P/E ratio is for how to read the first lens.
Educational content only, not investment advice. A warm sector can keep rising for years and a cool one can keep falling; the map describes how things are priced, not what happens next. Use it to choose where to look, then read the companies' own filings, starting with Earnings Quality and Shareholder Yield.