Capital Markets Winter 2021

V

Multiples vs. Fundamentals Style Wars

I • The large spread in fundamentals helps offset the elevated premium at which Growth stocks trade, making them cheaper per unit of growth

Russell 1000 Growth vs. Russell 1000 Value PEG Ratio

Russell 1000 Growth Relative to Russell 1000 Value P/E

II

225%

200%

Growth stocks are cheaper relative to long-term growth

III

175%

2.3x

150%

1.8x

125%

IV

100%

74%

Median: 41%

75%

50%

V

25%

0%

Russell 1000 Value

Russell 1000 Growth

1979 1984 1989 1994 1999 2004 2009 2014 2019

VI

Source: FactSet, Bank of America as of 12/31/20. 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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