Spring Has Sprung For Value Investing

Robeco

Matthias Hanauer, Sebastian Schneider

Research

13 Pages

Robeco examines whether value investing is staging a durable comeback after years of underperformance, arguing that improving fundamentals and sentiment may signal a turning point. The paper pushes back on claims that value is structurally broken, highlighting that valuation spreads remain near extremes seen during the late 1990s tech bubble.

Key Takeaways

Extreme Valuation Spread: The value spread reached levels comparable to the late 1990s, with multiples between cheap and expensive stocks diverging to near historical highs around 2.0x.
Enhanced Factor Outperformance: A multi-metric value strategy delivered cumulative returns exceeding 300% since 1985, outperforming traditional book-to-market approaches over the same period.
Improving Earnings Momentum: Analyst EPS revisions for value stocks hit near-record highs, with recent upgrades reaching the strongest levels observed in decades of historical data.
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