U.S. Equity Valuations Signal A Return To Normalcy
Visible Alpha launched a new dataset in its API products to streamline relative valuation. In this paper, we show the breadth and depth of this dataset in action. Using Visible Alpha’s differentiated valuation multiples, we look at current U.S. stock valuations in the next 12 months, as well as in the next 24 months, to analyze expectations for stock returns.
- U.S. stocks are reverting to historical averages from stratospheric valuations of the last decade, an unprecedented era of quantitative easing and enormous fiscal stimuli to the economy.
- Despite the profit windfalls these stocks have enjoyed from rising commodity prices during the pandemic and the current inflationary episodes, energy is the lowest-valued sector of the market.
- Analyzing forecasts of price-to-earnings by sector on a GAAP and non-GAAP basis illustrates technology and healthcare as two sectors in which the operational adjustments the firms report to their earnings substantially alter the investment thesis.
- Price to analysts’ expectation of non-GAAP EPS in the next twelve months has some predictive power of returns over those twelve months.
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*The full codebase is available via Visible Alpha Insights. Clients can access the two codebases here: Latest Valuation Multiples and Forward P/E Revisions and Returns. For all others, please contact our sales team.