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Euro Stoxx 50 NTM P/E at a 25% discount to S&P500 -- near 3-year lows

Sep 04, 2018

  • The NTM P/E for the Euro Stoxx 50 is trading at a 25% discount to the NTM P/E of the S&P500. 
  • At 0.75x, the ratio is near a 3-year low and at levels not seen since mid-CY2016. 
  • For the year, the S&P 500 Total Return Index is +9.94% as of Friday, August 31.  In comparison, the total return for the Euro Stoxx 50 is -4.18% (in USD$) as of yesterday’s close (September 4) in Europe. 
  • Over the next 12-months, earnings are expected to grow +22.37% for the S&P500 while consensus expects +8.54% earnings growth for the Euro Stoxx 50.  In PEG terms, the S&P500 NTM P/E implies a discount to growth while the Euro Stoxx is at a premium to growth.
  • While the Euro Stoxx 50 appears to be cheap vs. the S&P500 on a NTM P/E basis, however, growth adjusted it is much more expensive.

Food for thought for those arguing European stocks are cheap.

Source: Bloomberg