BofA: S&P 500 Relative Value Cheat Sheet: Capex Receivers vs. Spenders Thesis Playing Out; Communication Services Upgraded to Market Weight
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Bank of America's S&P 500 relative value cheat sheet refreshes cross-sector valuation signals, with the team upgrading Communication Services to Market Weight as the 'capex receivers versus capex spenders' thesis pays off. The exhibits argue a sensible valuation de-rating: decomposing year-to-date price returns through August 31, 2026, falling forward P/E multiples are set against rising forward EPS, pointing to strong earnings. Long-term growth expectations for Information Technology and Communication Services, based on net profit, have eased from historically elevated 2025 peaks. On balance sheets, off-balance-sheet commitments grew more than 50% quarter over quarter, while on-balance-sheet debt and operating leases expanded far more moderately. Communication Services trades at 1.0x relative forward P/E versus a 1.1x historical average. Industry-level relative valuations for Consumer Staples and Health Care against the S&P 500 draw on relative price-to-book, price-to-operating-cash-flow and forward P/E measures from 1986 through August 2026. Real estate relative price-to-book sits at 0.6x versus a 0.8x historical norm, while cumulative relative performance of 'momentum slices' extends back to December 1996.
Key exhibits
Exhibit 1
Exhibit 2
Exhibit 3
Exhibit 4
Exhibit 5
Exhibit 6
Exhibit 7
Exhibit 8
