Capital Markets: Winter 2019

Growth and Value Near Equilibrium ​ Valuation

• Despite their outperformance over the past several years, Growth stocks are not very expensive compared to their Value equity counterparts relative to expected growth rates or history

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

1.3x

Current premium is in-line relative to history

Growth stocks are cheaper relative to long-term growth

43%

1.1x

Median

Russell 1000 Value

Russell 1000 Growth

Source: FactSet, Bank of America as of 12/31/18.

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