Capital Markets: Observations and Insights Autumn 2019

​ Additional Insights

INSIGHTS

Smaller Capitalization Stocks Poised to Outperform

• Stronger fundamentals : Small caps are expected to grow much faster than large caps

• Compelling valuation : Small cap P/E multiple premium is low relative to history

• More levered to domestic economy : U.S. small caps have less exposure to international economies

Price-to-Earnings Russell 2000 / Russell 1000

Estimated Earnings Per Share Growth (Next 12-Months Estimate)

0% 10% 20% 30% 40% 50% 60% 70% 80%

23%

8%

Median

Russell 2000

Russell 1000

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

Source: FactSet. EPS are consensus estimates and actual earnings per share might be materially different than shown.

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