Energy Sector‘s CAPE ratio

The CAPE ratio for the Energy Sector evaluates energy-related stocks by comparing current prices to inflation-adjusted earnings averaged over the past 10 years. This approach smooths out earnings volatility, which is common in the energy industry due to fluctuating commodity prices. By applying the CAPE ratio to energy companies, investors can assess whether the sector is overvalued or undervalued compared to historical norms. A high CAPE suggests overvaluation and potential lower future returns, while a low CAPE indicates undervaluation and possibly higher returns. This helps investors make informed, long-term decisions about energy sector investments.