Measuring the valuation level of the median stock in an index can help mitigate the market-cap-weighted bias associated with many index level valuation statistics. This is important because index level valuations that are heavily influenced by a handful of large companies can give a misleading...
In our fundamental analysis, we have developed a system by which companies receive both a quality and a valuation score. The valuation component is comprised of various different metrics that compare the company’s valuation to items that include, but are not limited to, the benchmark’s...
Many market commentators have recently been claiming that stock valuations are ”fair” or ”average” and are basing these statements primarily on forward P/E ratios derived from market cap weighted indices like the S&P 500. At least two problems with this methodology come to mind....
There are 609 companies in the MSCI North America. Of which, 104 (17.1%) are in the consumer discretionary sector. Only the financial sector (109 stocks or 17.9%) account for a larger share in the MSCI North America....
One way we like to gauge the general level of valuations is to look at the multiple at which the median stock is trading and compare it history....
One unfortunate reality of market cap weighted indices is that statistics derived from these indices are inherently skewed by a handful of megacap companies. The P/E ratio is no exception....
We’ve been highlighting recently the current seemingly excessive level of stock valuations (here, here & here), so we thought it only fitting to dig a little deeper into the puzzle. Below we show pictures of the five sectors of the world stock market whose median...
In understanding that valuations are cyclical and valuation range regimes change over time, we’ve constructed some charts to compare current valuations with the previous 7 year average (roughly a complete market cycle) to help us gauge the general price level prevailing in the market....
One thing the financial news stations are not short of today are commentators arguing that stocks are cheap, or at least fairly valued....
Earlier today we highlighted how overbought the Telecom sector was, so we thought it only fair to mention that by some valuation metrics it is also the cheapest sector, on average. Below we show two tables of valuation breadth metrics....
One way to look at a cross section of stock valuations is to look at the percent of stocks that are trading above some trailing average valuation level....
For the last 40 years, the employment to population ratio has been well correlated with equity valuations.As would make sense, when more people are working, income is higher, demand is more sustainable and investors rationally capitalize corporate earnings at a higher rates. When employment rates...
A similar chart to one we posted last week that showed the percent of stocks trading above their 5 year average valuation, the one below shows the percent of stocks that are trading within 25% of their highest valuation level over the last 5 years....
For the last 20 years, valuations on the S&P 500 have correlated pretty well with the 25-54 year old male participation rate in the US. The now 13-year old structural bear market in the US is easy to see. The recent turn down in this...
