Value Gap in US Equities Is Widening Once Again

Why the value opportunity is as good as or better than it was at the end of 2021 is highlighted by Bill Nygren, CIO-US, Harris Associates.

Value investing expert Bill Nygren, CFA®, CIO-US, Portfolio Manager at Harris Associates, adviser to the Oakmark Funds, walks us through two compelling charts that highlight the pricing opportunities facing long-term investors. Video highlights include:
  • High price-to-earnings (P/E) US stocks surprisingly outperformed during a time of rising interest rates in late 2022 and the first half of 2023. As a result, the value opportunity may be as good as it was at the end of 2021.
  • The P/E dispersion among US equities is trending wider than normal – creating the potential for significant value in low P/E stocks.

CFA® and Chartered Financial Analyst® are registered trademarks owned by the CFA Institute.

P/E Ratio or Price/Earnings multiple: The "price to earnings ratio" compares a company's current share price to its per-share earnings. May also be known as the "price multiple" or "earnings multiple". Investors should not base investment decisions on P/E alone, as the denominator (earnings) is based on an accounting measure that is susceptible to forms of manipulation. The quality of a P/E ratio is only as good as the quality of the underlying earnings number.

Dispersion is a measure of the variability in performance of individual components in a portfolio, compared to the average.

This material is provided for informational purposes only and should not be construed as investment advice. The views and opinions contained herein reflect the subjective judgments and assumptions of the authors only and do not necessarily reflect the views of Natixis Investment Managers, or any of its affiliates. The views and opinions are as of October 18, 2023 and may change based on market and other conditions. There can be no assurance that developments will transpire as forecasted, and actual results may vary.

All investing involves risk, including the risk of loss. Investment risk exists with equity, fixed income, and alternative investments. There is no assurance that any investment will meet its performance objectives or that losses will be avoided.

Investing in value stocks presents the risk that value stocks may fall out of favor with investors and underperform growth stocks during given periods.

Natixis Distribution, LLC (Member FINRA|SIPC) is a marketing agent for the Oakmark Funds, a limited purpose broker-dealer and the distributor of various registered investment companies for which advisory services are provided by affiliates of Natixis Investment Managers.