Here is the latest value spread update for October 2024 from Validea’s market valuation tool.
Rather than focusing on market-cap weighted indexes like the S&P 500, our tool focuses on the valuation of the average stock relative to history. We use the median of our investable universe of 2700 stocks to perform the calculation. To compare value vs. growth, we look at the top decile of the cheapest stocks and compare it to the top decile of the most expensive stocks.
Value spreads remained steady in August. They currently sit in the 26th percentile using the TTM PE Ratio, meaning they have been cheaper 26% of the time historically. That is close to unchanged from last month.
Using the current year earnings estimate yields similar results, although value looks a little cheaper relative to growth using this metric.
Value is more expensive relative to growth using the Price/Sales, but still below its long-run average. It is currently in the 34th percentile.
Value spreads are not useful indicators in terms of predicting short-term market movements. They can, however offer interesting information for long-term investors who want to put current conditions in a historical context.
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