Capital Markets Summer 2022: Revealing Recession Patterns
V
The Growth Advantage Style Wars
I • Three variables drive P/E multiples: growth, return on capital and risk
• The Russell 1000 Growth Index has higher expected EPS growth, higher return on equity and lower risk in the form of better balance sheets as compared to the Russell 1000 Value Index
II
Lower Risk
Higher Returns
Stronger Growth
Return on Equity
Net Debt / EBITDA
Long-Term EPS Growth
III
35.9%
2.2x
16.4%
IV
9.3%
15.9%
0.9x
V
Russell 1000 Growth
Russell 1000 Value
Russell 1000 Growth
Russell 1000 Value
Russell 1000 Growth
Russell 1000 Value
Source: FactSet as of June 2022. Growth represents consensus long-term analyst estimates and actual future EPS growth rates might be materially different than the forecasts shown.
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