Capital Markets Summer 2020

V

Multiples vs. Fundamentals Style Wars

I • The large and widening spread in fundamentals more than offsets the somewhat elevated premium at which Growth stocks trade, making them cheaper per unit of growth

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

175%

3.9x

150%

125%

IV

100%

1.8x

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 6/30/20. 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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