Growth stock valuations have declined considerably over the past two years, particularly within smaller cap growth stocks. How do these valuations compare to history and what might they imply going forward?
Shorthand valuation multiples, such as price-to-earnings (P/E), do not tell investors much about the prospective returns of individual companies, in our opinion. However, these kinds of valuation multiples may provide important information about broad-based index sentiment. So, what are they telling us now?