A primary argument for stocks being cheap is that consensus for S&P 500 earnings this year is $103, which implies that the index is trading at 13.7x forward earnings. Because the index is market cap weighted though, the index estimates skew the P/E of the index toward that of the larger companies and can sometimes give an inconsistent picture of the average stock in the index. In order to adjust for that effect, below are the S&P 500 multiples of the average constituent based on 2011, 2012 and 2013 estimates.
P/E Multiple of S&P 500 Index vs. Individual Constituents