Global Market P/E Ratios

Our Methodologies

The Valuation Score is a composite measure designed to evaluate the relative attractiveness of global equity markets. The framework combines three complementary valuation metrics to assess historical valuation, earnings normalization, and growth-adjusted valuation, thereby enabling consistent cross-country comparisons while accounting for structural differences across markets. Detailed scoring parameters, thresholds, and weightings underlying the composite score are proprietary to 1 Finance Research.

Scoring Framework

The composite score is derived from three valuation components:

• P/E Ratio: Compares current market valuation with its own historical valuation benchmark.
• CAPE Ratio: Assesses valuation using cyclically adjusted earnings to account for long-term earnings normalization.
• PEG Ratio: Incorporates earnings growth to provide additional context on valuation relative to growth prospects.

Each component contributes to the overall valuation score based on its relative importance within the framework. The framework balances historical valuation, normalized earnings, and earnings growth to provide a more comprehensive assessment than any individual valuation metric.

Score Interpretation

The index valuation score is interpreted as follows:

• Above 85: Highly Undervalued
• 80 to 85: Undervalued
• 70 to 80: Fairly Valued. This category typically represents the largest share of countries and indices.
• 65 to 70: Overvalued
• Below 65: Highly Overvalued

References:

• S&P Global Market Intelligence LLC, via Simply Wall St
• Research Affiliates, LLC
• 1 Finance Research