Equity: Growth style/Value/Momentum investing @S2000

S2000 and others, need your assistance- Please clarify the theory side and then provide comment on the Problem below.

As per the Equity (Market Based Valuation: Price and Enterprise Value Multiples) end of the readings BB example:

If a stock screen has: EPS growth, sales growth & internal growth rate (g) -> implies Growth Style investing

If a stock screen has: P/BV, P/CF, P/S, Dividend yield -> implies Value Style investing

I see the curriculum also talks about Momentum Style investing (this i belive is based on Earnings surprise?)

Can you confirm if my understanding above is correct? that the above is three kinds of investing at Level II CFA?

Also in the BB example (page-455), the text also seems to suggest that momentum is usually associate with growth…So does it mean that momentum style is same as growth style investing?

Below is a problem from BSAS. A stock screen uses the following criteria:

  • Market capitalization less than $4.0 billion
  • Earnings per share (EPS) growth trailing twelve months (TTM) vs prior TTM greater than 15%
  • Forward EPS growth greater than 10%
  • Forward price to earnings (P/E) multiple less than 30x
  • Price to sales less than 5x
  • Debt to equity ratio less than 50%
  • 3 month price performance less than 12 price performance

Is the above:

- Core value investing. - Core growth investing. - Momentum investing.

Is it correct to say that the above is a Core growth investing based on the theory above?


Guys, common…?.its a question from Equity which has the highest weightage on exam!!

From what I can remember, Momentum investing focusing exclusively on in price movements(relative strength) between a specific asset and a benchmark, but someone else may want to confirm.

I personally think your second question is a little out there in terms of what the CFAI will be questioning, don’t get bogged down with that