Low Valuations Tough to Come By, Wherever You Look
It is no secret that, whichever way we look at valuations, we think stocks are expensive. One of the more unique methodologies we employ to get a sense of where equity valuations are is to look at them grouped according to ‘buckets’ designated by pertinent levels. For instance, in the chart immediately below, the reader will note that nearly 80% of stocks in the MSCI World Index currently trade at a P/E greater than 10x while essentially no stocks can be found with a P/E less than 5x:
We see the same trend when we look at P/CF, where valuations have been on a mostly uninterrupted course higher since 2009:
The story is no different when we look at P/B (almost 90% of stocks are trading above 1x book value) or P/S, where almost 80% of stocks in the MSCI World are trading above 1x and more than 40% are trading above 2x:
By region, there is some variation, but we can still be confident that there is not a whole lot of value out there right now.