Capital Markets Autumn 2020

III

Smaller Capitalization Stocks Look Attractive Valuation

• Small caps are expected to grow much faster than large caps

• Underperformance has compressed small cap valuations as compared to history

I

II

Estimated Earnings Per Share Trajectory

Price-to-Earnings S&P Small Cap 600 / S&P 500

S&P Small Cap 600

S&P 500

40%

100 120 140 160 180 200 220 240 260

III

20%

Small caps growing faster

0%

IV

-20%

-40%

EPS Indexed to 100

V

-60%

2020

2021

2022

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

2014

2016

2018

2020

VI

Source: FactSet as of 09/30/20. P/E is price divided by earnings per share over last 12-months. Estimated EPS trajectory based on consensus estimates from FactSet.

19