Looking ahead, FactSet projects the utilities sector is expected to experience earnings growth of 4.4% in 2016. Consequently, analysts warned that the lofty prices may not be supported by robust earnings growth.
The trailing 12-month PE ratio for utilities of 19.85 is now higher than that of the more volatile technology sector at 19.16.
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“The last two times when utilities rallied in the face of falling interest rates—for example in 2011-12 and late 2014, a sudden rebound in rates resulted in the collapse of utilities,” Jaffee added.
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Utilities Select Sector SPDR