Here is the latest value spread update for November 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 stocks got cheaper relative to growth stocks since our last update. They currently sit in the 21st percentile using the TTM PE Ratio, meaning they have been cheaper 21% of the time historically. That is down 5% from last month.
Using the current year earnings estimate yields similar results.
Valuations are also similar relative to growth using the Price/Sales ratio.
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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