Financial Services Is Undervalued Based on Long-Term Fundamentals
Berkshire an ideal defensive investment for the long term.
Berkshire an ideal defensive investment for the long term.
The Morningstar US Financial Services Index has significantly underperformed the Morningstar US Markets Index quarter to date, down 26.2% compared with 19.1%, and year to date, down 10.3% compared with 6.4%. That said, the median North America-based financial-services stock trades at a 27% discount to its fair value estimate, so we consider the North American financial sector undervalued. The valuation of financials has rapidly changed from a quarter ago, when the median financial sector stock was 3% overvalued.
Michael Wong does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.