Small-cap ETF P/E ratio 21.6, compared with large caps 20% undervalued
The small-cap index is trading at a lower valuation than large-cap stocks. The price-to-earnings ratio (P/E) of the Vanguard Small-Cap ETF is 21.6, while the P/E ratio of the large-cap index is 27.4. The projected earnings growth rate for 2027 is presented at 18.3% for small caps, higher than 17.3% for large caps.
Wall Street is focusing on large technology stocks such as Nvidia and Apple. As attention has concentrated on large technology stocks, some have pointed out that small-cap stocks are receiving relatively less attention. From this perspective, small caps are being mentioned as a relative investment opportunity.
The price-to-earnings ratio (P/E) of the Vanguard Small-Cap ETF is 21.6. The P/E ratio of the index tracking large-cap stocks is 27.4. The difference in P/E ratios between the two indices shows the current valuation gap.
The same data summarized that small caps are trading at a 20% discount to large caps. The discount level was calculated from the difference in P/E ratios between the indices. The valuation gap reflects differences in index composition and market supply and demand.
Earnings growth forecasts were also presented. 2027The earnings growth forecast for years was reported at small-cap companies at 18.3%. This figure was presented for comparison with the forecast for large-cap companies.
The earnings growth forecast for large-cap companies was 2027for years, at 17.3%. The figures above show that small-cap companies have both low P/E ratios and relatively high growth prospects. The figures presented in the article are P/E 21.6·27.4and growth rates 18.3%·17.3%.
Sources: The Motley Fool
Bullstory synthesized this report from the linked sources. AI may have assisted the writing process. Check the original reports for factual confirmation.