Investment Style Guide - Yardeni Research · Investment Style Guide Yardeni Research, Inc. June 25, ... S&P 500 Growth/Value Relative Price Performance 5 ... S&P Valuation 16-17

Investment Style Guide

Yardeni Research, Inc.

July 13, 2018

Dr. Edward Yardeni516-972-7683

[email protected]

Joe Abbott732-497-5306

[email protected]

Please visit our sites atwww.yardeni.comblog.yardeni.com

thinking outside the box

Table Of Contents Table Of ContentsTable Of Contents

July 13, 2018 / Investment Style Guide www.yardeni.com


Index Price Performance: 2018 1Index Price Performance: 2017 2Index Price Performance: 2016 3Index Price Performance: 2015 4S&P 500 Growth/Value Relative Price Performance 5S&P 500 Pure G/V Relative Price Performance 6Growth/Value Relative Forward Revenues & Earnings 7Market Cap: S&P Earnings & Valuation 8Market Cap: S&P 500, 400, 600 9-10Market Cap: Russell 1000 vs. 2000 11Growth vs. Value: Revenue Squiggles 12Growth vs. Value: Earnings Squiggles 13Growth vs. Value: Profit Margins 14Growth vs. Value: Earnings Growth 15Growth vs. Value: S&P Valuation 16-17Growth vs. Value: Market Cap Shares 18Growth vs. Value: Net Revenue Revisions 19Growth vs. Value: Net Earnings Revisions 20Growth vs. Value: Revenue Growth 21Growth vs. Value: Earnings Growth 22Russell Valuation SmallCap, Growth, Value 23

Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec2018

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14LARGECAP & SMIDCAP PERFORMANCE: 2018(percent change ytd)

S&P 500 LargeCap (4.8)S&P 400 MidCap (5.0)S&P 600 SmallCap (11.7)Russell 1000 LargeCap (4.9)Russell 2000 SmallCap (10.1)

Latest data thru: 07/13/18

Source: Frank Russell Company, Haver Analytics, and Standard & Poor’s Corporation.

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Figure 1.


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18GROWTH & VALUE PERFORMANCE: 2018(percent change ytd)

S&P 500 LargeCap Growth (10.8)S&P 500 LargeCap Value (-1.6)S&P 400 MidCap Growth (6.8)S&P 400 MidCap Value (3.2)S&P 600 SmallCap Growth (14.9)S&P 600 SmallCap Value (8.6)

Latest data thru: 07/13/18


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Figure 2.

Index Price Performance: 2018

Page 1 / July 13, 2018 / Investment Style Guide www.yardeni.com



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Figure 3.


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S&P 500 LargeCap Growth (25.4)S&P 500 LargeCap Value (12.6)S&P 400 MidCap Growth (18.4)S&P 400 MidCap Value (10.2)S&P 600 SmallCap Growth (13.5)S&P 600 SmallCap Value (9.8)


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Figure 4.





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Figure 5.


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S&P 500 LargeCap Growth (5.1)S&P 500 LargeCap Value (14.3)S&P 400 MidCap Growth (13.3)S&P 400 MidCap Value (24.0)S&P 600 SmallCap Growth (20.7)S&P 600 SmallCap Value (29.1)


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Figure 6.





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S&P 500 LargeCap (-0.7)S&P 400 MidCap (-3.7)S&P 600 SmallCap (-3.4)Russell 1000 LargeCap (-1.1)Russell 2000 SmallCap (-5.7)


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Figure 7.


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S&P 500 LargeCap Growth (3.8)S&P 500 LargeCap Value (-5.6)S&P 400 MidCap Growth (0.8)S&P 400 MidCap Value (-8.4)S&P 600 SmallCap Growth (1.5)S&P 600 SmallCap Value (-8.1)


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Figure 8.




95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20.35

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S&P 500 GROWTH vs VALUE RELATIVE TO S&P 500

Relative to S&P 500*GrowthValue

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* Rising (falling) line indicates that the index is outperforming (underperforming) the S&P 500.Source: Standard & Poor’s and Haver Analytics.

Figure 9.

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019.8

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RELATIVE PRICE INDEX: S&P 500 GROWTH & VALUE(Growth price index relative to Value price index)

Rising line indicates thatGrowth is outperforming Value

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Source: Standard & Poor’s Corporation and Haver Analytics.

Figure 10.

S&P 500 Growth/Value Relative Price Performance



1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019.5

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RELATIVE PRICE INDEX: S&P 500 PURE GROWTH & PURE VALUE(relative to S&P 500)

Pure Growth relative to S&P 500Pure Value relative to S&P 500

Rising line indicates thatthe index is outperforming the S&P 500

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Figure 11.

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019.75

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RELATIVE PRICE INDEX: S&P 500 PURE GROWTH & PURE VALUE(Pure Growth price index relative to Pure Value price index)

Rising line indicates thatPure Growth is outperforming Pure Value

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Figure 12.

S&P 500 Pure G/V Relative Price Performance



2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019.35

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RELATIVE FORWARD REVENUES: S&P 500 GROWTH & VALUE INDEX


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Source: Thomson Reuters I/B/E/S.

Figure 13.

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019.6

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1.1

1.2

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RELATIVE FORWARD EARNINGS: S&P 500 GROWTH & VALUE INDEX


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Figure 14.

Growth/Value Relative Forward Revenues & Earnings



1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 201950

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S&P FORWARD EARNINGS PER SHARE(weekly, Jan 1999=100)

Forward Earnings*S&P 500 LargeCap (328.6)S&P 400 MidCap (559.7)S&P 600 SmallCap (587.5)

* 52-week forward consensus expected operating earnings per share. Time-weighted average of the current year’s and next year’s consensus forecast.Source: Thomson Reuters I/B/E/S.

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Figure 15.

1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 20198

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P/E RATIOS FOR S&P INDEXES*(weekly)

S&P 500 LargeCap (16.3)

S&P 400 MidCap (16.6)

S&P 600 SmallCap (17.8)

* Price divided by 52-week forward consensus expected operating earnings per share.Source: Thomson Reuters I/B/E/S.

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Figure 16.

Market Cap: S&P Earnings & Valuation



1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019100

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S&P INDEXES(weekly)


S&P 400 MidCap (1996.4)



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Figure 17.

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019-50

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S&P INDEXES(weekly, yearly percent change) S&P 500 LargeCap (13.9)

S&P 400 MidCap (13.1)



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Figure 18.

Market Cap: S&P 500, 400, 600



Figure 17.

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019-60

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S&P 500 LARGECAP vs. S&P 400 MIDCAP(weekly, yearly percent change)


S&P 400 MidCap (13.1)

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019-40

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S&P 500 vs. S&P 400 SPREAD(yearly percent change, basis points)

S&P 500 Outperforms 400

S&P 500 Underperforms 400

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019-60

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S&P 500 LARGECAP vs. S&P 600 SMALLCAP(yearly percent change) S&P 500 LargeCap (13.9)


1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019-50

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S&P 500 vs. S&P 600 SPREAD(yearly percent change, basis points)

S&P 500 Outperforms 600

S&P 500 Underperforms 600


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Market Cap: S&P 500, 400, 600



Figure 18.

90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19100

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7/6RUSSELL 1000 vs. RUSSELL 2000(weekly, ratio scale)

Russell 1000 LargeCap (1533.6)

Russell 2000 SmallCap (1694.1)

90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19-60

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RUSSELL 1000 vs. RUSSELL 2000(yearly percent change)

Russell 1000 LargeCap (14.1)Russell 2000 SmallCap (19.6)

90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19-50

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RUSSELL 1000 vs. RUSSELL 2000 SPREAD(yearly percent change, basis points)

Russell 1000Outperforms 2000

Russell 1000Underperforms 2000

Source: Frank Russell Company and Haver Analytics.

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Market Cap: Russell 1000 vs. 2000



2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019300

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* Time-weighted average of consensus estimates for current year and next year. Monthly through December 2005, then weekly.Source: Thomson Reuters I/B/E/S.

S&P 500 CITIGROUP GROWTH REVENUES PER SHARE(analysts’ average forecasts, ratio scale)

Consensus ForecastsAnnual estimates

Forward revenues*

Figure 19.

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019500

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S&P 500 CITIGROUP VALUE REVENUES PER SHARE(analysts’ average forecasts, ratio scale)


Forward revenues*

Figure 20.

Growth vs. Value: Revenue Squiggles



1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 201915

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S&P 500 CITIGROUP GROWTH INDEX OPERATING EPS(analysts’ average forecasts, ratio scale)


Forward earnings*

Figure 21.

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 201922

37

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S&P 500 CITIGROUP VALUE INDEX OPERATING EPS(analysts’ average forecasts, ratio scale)


Forward earnings*

Figure 22.

Growth vs. Value: Earnings Squiggles



2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 20198

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(using analysts’ average earnings and revenues forecasts)

* Time-weighted average of the consensus estimates for current year and next year. Monthly through December 2005, weekly thereafter.Source: Thomson Reuters I/B/E/S.

S&P 500 CITIGROUP GROWTH PROJECTED PROFIT MARGIN


Forward profit margin* (16.5)

Figure 23.

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 20195

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(using analysts’ average earnings and revenues forecasts)

* Time-weighted average of the consensus estimates for current year and next year. Monthly through December 2005, weekly thereafter.Source: Thomson Reuters I/B/E/S.

S&P 500 CITIGROUP VALUE PROJECTED PROFIT MARGIN


Forward profit margin* (10.1)

Figure 24.

Growth vs. Value: Profit Margins



Figure 25.

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019-20

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S&P 500 CITIGROUP GROWTH vs. VALUESTEG*

Growth (14.6)Value (13.2)

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 20195

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LTEG*Growth (16.7)Value (15.3)

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019-20

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GrowthSTEG* (14.6)LTEG* (16.7)

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019-10

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ValueSTEG* (13.2)LTEG* (15.3)

* STEG: 12-month forward consensus expected earnings growth. LTEG: 5-year forward consensus expected earnings growth.


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Growth vs. Value: Earnings Growth



1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 20195

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FORWARD P/E RATIOS FOR S&P 500 CITIGROUP GROWTH vs. VALUE*(daily)

Growth (19.9)

Value (13.9)

* Price divided by 12-month (52-week) forward consensus expected operating earnings per share. Monthly data through December 2005, daily thereafter.Source: Thomson Reuters I/B/E/S.

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Figure 26.

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019.75

1.00

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RELATIVE P/E: S&P 500 GROWTH & VALUE*(Growth P/E relative to Value P/E)

* Price divided by 12-month (52-week) forward consensus expected operating earnings per share. Monthly data through December 2005, weekly thereafter.Source: Thomson Reuters I/B/E/S.

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Figure 27.

Growth vs. Value: S&P Valuation



1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019.6

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PEG RATIOS FOR S&P 500 CITIGROUP GROWTH vs. VALUE*

Growth (1.14)Value (0.90)

* Using 5-year forward consensus expected earnings growth and price divided by 12-month (52-week) forward consensus expected operating earnings per share.Monthly data through December 2005, weekly thereafter.Source: Thomson Reuters I/B/E/S.

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Figure 28.

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019.25

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RELATIVE PEG: S&P 500 GROWTH & VALUE*(Growth PEG relative to Value PEG)


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Figure 29.

Growth vs. Value: S&P Valuation



1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 201930

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S&P 500 CITIGROUP GROWTH INDEX(percent)

Capitalization Share (54.0)

Earnings Share* (45.6)

* Using consensus 12-month forward earnings forecasts.Source: Thomson Reuters I/B/E/S.

yardeni.com

Figure 30.

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 201930

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S&P 500 CITIGROUP VALUE INDEX(percent)

Capitalization Share (46.0)

Earnings Share* (54.4)

* Using consensus 12-month forward earnings forecasts.Source: Thomson Reuters I/B/E/S.

yardeni.com

Figure 31.

Growth vs. Value: Market Cap Shares



1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019-50

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NERI Apr 15.86 May 11.80 Jun 10.67

Jun

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* Three-month moving average of the number of forward earnings estimates up less number of estimates down, expressed as a percentageof the total number of forward earnings estimates.Source: Thomson Reuters I/B/E/S.

S&P 500 CITIGROUP GROWTH INDEX NET EARNINGS REVISIONS*

Figure 32.

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019-50

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NERI Apr 11.33 May 7.28 Jun 5.93

Jun

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S&P 500 CITIGROUP VALUE INDEX NET EARNINGS REVISIONS*

Figure 33.

Growth vs. Value: Net Revenue Revisions



1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019-50

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NERI Apr 15.86 May 11.80 Jun 10.67

Jun

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S&P 500 CITIGROUP GROWTH INDEX NET EARNINGS REVISIONS*

Figure 34.

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019-50

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NERI Apr 11.33 May 7.28 Jun 5.93

Jun

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S&P 500 CITIGROUP VALUE INDEX NET EARNINGS REVISIONS*

Figure 35.

Growth vs. Value: Net Earnings Revisions



2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019-20

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S&P 500 CITIGROUP GROWTH REVENUE GROWTH(analysts’ average forecasts, ratio scale)


Forward revenues*

2008 (9.6)2009 (-8.7)2010 (11.4)2011 (14.2)2012 (6.6)2013 (4.2)

2014 (8.5)2015 (5.1)2016 (4.9)2017 (9.1)2018 (11.7)2019 (7.9)Fwrd (9.0)

Figure 36.

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019-10

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S&P 500 CITIGROUP VALUE REVENUE GROWTH(analysts’ average forecasts, ratio scale)


Forward revenues*

2008 (2.6)2009 (-5.9)2010 (7.7)2011 (7.4)2012 (-2.2)2013 (0.4)

2014 (0.6)2015 (-7.9)2016 (0.2)2017 (5.2)2018 (6.2)2019 (3.7)Fwrd (4.6)

Figure 37.

Growth vs. Value: Revenue Growth



2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019-30

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S&P 500 CITIGROUP GROWTH EARNINGS GROWTH(percent)


Forward revenues*

2008 (7.9)2009 (-12.6)2010 (29.1)2011 (20.5)2012 (11.8)2013 (9.1)

2014 (14.5)2015 (9.8)2016 (7.1)2017 (14.6)2018 (23.6)2019 (11.4)Fwrd (14.6)

Figure 38.

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019-40

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-20

-10

0

10

20

30

40

50

60

70

08

10

11

1213

14

15

18

197/5

09

16

17

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S&P 500 CITIGROUP VALUE EARNINGS GROWTH(percent)


Forward revenues*

2008 (-35.0)2009 (23.5)2010 (60.3)2011 (10.0)2012 (1.5)2013 (3.7)

2014 (1.5)2015 (-5.6)2016 (-3.3)2017 (8.6)2018 (21.3)2019 (8.8)Fwrd (13.2)

Figure 39.

Growth vs. Value: Earnings Growth



2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 202010

15

20

25

30

35

40

10

15

20

25

30

35

40

7/5

FORWARD P/E RATIOS FOR RUSSELL 2000*(weekly)

Russell 2000 (23.1)Russell 2000 Growth (35.0)Russell 2000 Value (17.0)


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Figure 40.

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 201910

15

20

25

30

35

10

15

20

25

30

35

7/5

FORWARD P/E RATIOS FOR US SMALLCAP *

P/E capped at 35 due to extreme values. Russell 2000 (23.1)S&P 600 SmallCap (17.8)


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Figure 41.

Russell Valuation SmallCap, Growth, Value



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