EL7.AI
StocksMedium•28 October 2026•
2 min read

New S&P Rules Reclassify Growth and Value Indices Before December 21, 2026, Open

Key Facts

1The revised rules take effect before the market opens on December 21, 2026, and the changes will appear in preliminary files starting December 4.
2The methodology removes 12-month stock price momentum from the growth assessment, which includes measures covering three years.
3The value methodology adds a free cash flow-to-price measure, with specific sectors excluded.
4The affected core indices include the S&P 500, S&P Composite 1500, S&P MidCap 400, S&P 900, S&P SmallCap 600 and S&P 1000.

S&P Dow Jones Indices is adopting new rules to classify stocks in its growth and value indices, effective before the market opens on December 21, 2026. Clients will first see the changes in preliminary index files starting December 4. The move revises the criteria used to determine stock characteristics; it is not a rebalancing that has already been completed. Funds tracking the indices are likely to adjust their holdings to reflect the new constituents.

In its current growth assessment, S&P uses three factors, including the change in earnings per share over three years relative to the current price, and sales growth per share over the same period. The framework also includes the stock’s 12-month price momentum. The revised rules will remove momentum from the growth assessment while retaining the cited earnings and sales measures. This means price movement over the previous year will no longer be among the three factors determining the growth score. The style score is used to classify each security wholly or partly as growth or value.

The new value framework adds book value to price, adjusted for intangible assets, alongside a free cash flow-to-price measure. The earnings assessment will combine the trailing earnings-to-price ratio and the one-year forward earnings-to-price ratio using a simple arithmetic average. The sales-to-price ratio will remain among the factors used. The free cash flow measure excludes real estate, banks, insurance and some financial services activities, which will rely on the other value factors. These changes form part of a methodology that combines several measures rather than relying on a single value indicator.

The affected core index universes include the S&P 500, S&P Composite 1500, S&P MidCap 400, S&P 900, S&P SmallCap 600 and S&P 1000. The style index series divides each core index’s float-adjusted market capitalization approximately equally between growth and value indices. The “pure style” series has no overlapping stocks between the growth and value sides. S&P previously opened a consultation on its growth and value factor framework on September 4, 2026, and closed it on September 25 of the same year. Preliminary files will show the changes on December 4, ahead of the new rules taking effect on December 21, 2026.