Cosmo,
Gottfried responded to your question (with a very neat site, I might add).
I'm not sure watching P/Es in the traditional way is the way to determine whither the builders. Similar to the oil service stocks, it is the crushing of the E for earnings that raises a P/E to a high level, and eventually will be indicative of a "buy" in the stock. Even thought the P for price falls, the earnings look so bad (and it's a good time for the companies to take in all the bad news they can, which further depress earnings) the P/E remains high. It is when earnings are cresting (see TOL in August, I think) and therefore when P/Es are low that you want to be out or shorting.
If I had some nifty site (maybe Gottfried has an answer here, too) you could look at the p/e ratios for PTEN in 1998/9 at 2 7/8 or GW at 78 cents and see that the ratios were either sky high or negative, which was just the time to buy. PTEN's current p/e is 9, GW's is 7.
Builders are cyclical, and I think, given the macros of the world (it's official, we've been in recession since March 2001), I would expect to see earnings fall and p/e's skyrocket first, then prices continue to fall and p/e's to stay relatively high (say, 20) until the shakeout is complete.
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