Morningstar Runs the Numbers
We take a numerical look through this week's Morningstar research. Plus, our most popular articles and videos for the week ended Sept. 21.
Inspired by Harper's Index (with a tip of the hat to FiveThirtyEight's Significant Digits blog), Morningstar Runs the Numbers uses a numbers-based approach to highlight recent Morningstar research, along with some outside news stories.
Morningstar ran through our 7 Days of Retirement Readiness special report. Christine Benz discussed everything from assessing your income requirements to crafting an asset allocation for retirement.
With the S&P 500 and Dow hitting records, we took a look at the market valuation. Overall, Morningstar's equity research team sees stocks as slightly overvalued with the ratio of price to our fair value estimate standing at 1.03.
There isn't a large gap in average valuations by sector. The most overvalued sector is industrials at 1.06--that's 6% above our estimate of intrinsic value. The consumer cyclical and healthcare sectors are close behind, each looking 5% overvalued.
AIG now has a new CEO, Brian Duperreault, who has not only had success in insurance generally but in the very lines that AIG needs to remediate. We estimate that the company will need to achieve only a 97% combined ratio in its commercial P&C operations in order to generate a 10% adjusted ROE. This 97% level would still be worse than its peer group, but we believe some reversion toward peer results is reasonable now that the company is under capable management.
The Ultimate Stock Pickers identified 10 widely held and 10 top dividend-yielding stocks owned by some of our favorite funds managers. All have payouts above the S&P 500's current 1.9% yield and carry wide or narrow economic moats.
Speaking of moats, Susan Dziubinski highlighted 10 funds that hold lots of stocks with economic moats in Our Picks.
Most Popular Articles
Most Popular Videos
Morningstar.com does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.