Capital Markets Spring 2020

V

Oscillating Valuations Style Wars

I • Growth stocks are beginning to look more expensive compared to their Value equity counterparts, but we believe earnings of Value stocks will decline more significantly, potentially reducing the valuation spread over the coming months

II

Russell 1000 Growth vs. Russell 1000 Value PEG Ratio

Russell 1000 Growth Relative to Russell 1000 Value P/E

225%

200%

III

Growth stocks are cheaper relative to long-term growth

1.7x

175%

1.6x

150%

125%

IV

100%

65%

75%

Median: 41%

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 3/31/20. 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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