Dow Jones Indexes has unveiled indexes for the two investing approaches in France, Germany, Italy, the Netherlands, Sweden and the United Kingdom. Company officials say the new indexes are designed to complement existing Dow Jones STOXX European regional growth and value indexes.
When classifying a stock as value or growth, Dow Jones Indexes uses a six-factor model that includes:
- projected price-to-earnings ratio
- projected earnings growth
- trailing earnings growth
- trailing price-to-earnings ratio
- price-to-book ratio
- dividend yield.
Companies that do not exhibit strong growth or value characteristics do not qualify for the index and are considered neutral issues, Dow Jones said.
According to Dow Jones officials, growth stocks typically demonstrate higher revenue, sales, profit and cash flow and are more likely to reinvest profits than pay dividends. Value stocks tend to have relatively low price-to-earnings and price-to-book ratios and are more likely to pay dividends.
More information about the new indexes and full component lists and ticker symbols are available on the Dow Jones Indexes Web Site .