Capital Markets: Observations & Insights

Growth Valuations Are Reasonable Valuation

• Despite their recent outperformance, Growth stocks remain reasonably valued compared to Value stocks, relative to history and their respective growth rates

Russell 1000 Growth vs. Russell 1000 Value PEG Ratio (P/E Divided by Long-Term Growth Rate)

Russell 1000 Growth Relative to Russell 1000 Value P/E

1.5x

37% premium is reasonable relative to history

1.3x

Median

Russell 1000 Value

Russell 1000 Growth

Source: FactSet, Bank of America as of 3/31/18.

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