Capital Markets: Observations & Insights

III

Growth and Value Near Equilibrium Style Wars

• Despite their outperformance over the past several years, Growth stocks are not very expensive compared to their Value equity counterparts relative to expected growth rates or history

I

II

Russell 1000 Growth vs. Russell 1000 Value PEG Ratio

Russell 1000 Growth Relative to Russell 1000 Value P/E

225%

200%

III

2.1x

175%

Growth stocks are cheaper relative to long-term growth

150%

125%

IV

1.6x

100%

75%

52%

Median: 40%

Value is Attractive

50%

V

25%

Growth is Attractive

0%

Russell 1000 Value

Russell 1000 Growth

1979 1984 1989 1994 1999 2004 2009 2014 2019

VI

Source: FactSet, Bank of America as of 12/31/19. PEG ratio is P/E divided by long-term growth rate. The performance data quoted represents past performance, which is not an indication or a guarantee of future results.

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