A Comeback for Value?
February 13, 2020
Growth stocks have outperformed their value counterparts in all but three years since the financial crisis, as measured by calendar-year returns of the Russell 1000 Growth and Value indices. We believe the enthusiasm has gotten out of hand: The growth universe recently traded at 21 times forward earnings per share, while value earned a multiple of just 14. The earnings outlook over the next two years favors growth, but this disparity ranks in the 90th percentile of relative valuation for the two groups over the last 25 years, exceeded only by the high-water mark during the tech bubble of the last century.