Goldman Sachs: The industrial sector is "even more expensive" than tech stocks; global sector pricing logic is changing

According to information from Zhitong Finance APP, the latest sector valuation analysis from Goldman Sachs Research shows that the 12-month forward price-to-earnings ratio of the industrial sector has now surpassed that of the technology sector, indicating a shift in relative valuations among global stock market sectors. The forward P/E ratio of the industrial sector is 19.4 times, higher than the overall market at 16.7 times and the technology sector at 16.2 times. The industrial sector has also become one of the higher-valued sectors in the global stock market, second only to growth stocks at 20.6 times, and equal to both consumer staples and consumer discretionary sectors at 18.7 times each.

The research compares the valuations of each sector and style in the MSCI World Index with historical data from the past 20 years.

This valuation gap is noteworthy because the technology sector has traditionally enjoyed a premium relative to many other sectors. Data from Goldman Sachs show that the forward P/E ratio of the communication services sector is 18.1 times, healthcare is 17.7 times. Utilities stand at 15.1 times, materials at 14.6 times, and value stocks at 14.0 times.

In contrast, the forward P/E ratio for the energy sector is 12.8 times, while the financial sector has the lowest among all sectors at 12.7 times. This difference highlights the significant disparities between current and long-term historical valuations of global equity sectors.

These data are being released at a time when investors are evaluating sector allocation due to changes in interest rates, earnings growth, and capital expenditure expectations. Goldman Sachs also points out that the overall valuation of the US stock market has declined this year, with the S&P 500’s forward P/E ratio dropping from about 22 times to 19 times, while its valuation relative to bonds has remained largely unchanged.