S&P Dow Jones overhauls growth and value scoring rules for US equity indices

what happened

S&P Dow Jones Indices is revising how it sorts American stocks into growth and value categories. Twelve-month share price momentum will no longer feed the growth score, leaving two measures: the three-year change in earnings per share relative to the current price, and three-year sales per share growth.

The value side sees larger shifts. The classic book value-to-price ratio gets replaced by a version adjusted for intangible assets, trailing and forward earnings-to-price will be averaged together, the sales-to-price ratio stays, and free cash flow-to-price is added. Real estate, banks, insurers and certain financial services will be scored with the other value factors instead.

According to the provider's release dated October 23, the new methodology covers the S&P 500, mid-cap and small-cap style indices and takes effect December 21, 2026, during the annual reconstitution. Clients receive preliminary index files from December 4. The information is reported by TradingView, citing S&P Dow Jones Indices.

why it matters

Reclassifying stocks between growth and value baskets can shift holdings across style funds and ETFs, so the December reconstitution may prompt flows between them. Adding free cash flow gives cash-generative companies more weight in value benchmarks, while dropping momentum reduces the influence of recent growth leaders.

market impact

Style funds on S&P indices: new scoring rules may reshuffle holdings and fund flows around the December reconstitution

instruments