Although some market observers see energy equities as value plays, data suggest the sector is actually pricey relative to the broader market thanks to slumping earnings growth.
“Energy remains the most expensive due to falling net income margins – even though the XLE is down 15% in the past 12 months. Earnings in the sector have dropped along with energy prices,” reports Lawrence Lewithinn for Yahoo Finance.
Profit expectations have fallen dramatically which in turn has pushed the sector’s P/E ratio much higher even as stock prices have declined, though P/Es have come off their highs and estimates appear to have stabilized,” according to AltaVista. [Oil ETF Dividends Appear Safe…Sort Of]
Energy Select Sector SPDR
