- U.S. financials perform well on a 'return on equity' basis, and forward price/earnings ratios are low.
- While financial stocks are not as intuitively alluring as tech stocks, their returns on equity are good, and earnings are likely to be mostly sustainable at current levels.
- Therefore, the low price/book and low price/earnings ratios indicate strong total earnings yields, thus indicating potential misvaluations.
- Financials stocks have outperformed recently, and I still think they have more room to run; they still seem pessimistically priced, notwithstanding the stronger performance of recent.
For further details see:
FNCL: U.S. Financials Are Undervalued With Strong Forward Earnings