Skip to Content

Quarter-End Insights

Financial Services Is Undervalued Based on Long-Term Fundamentals

Berkshire an ideal defensive investment for the long term.

Michael Wong, CFA, CPA

Mar 31, 2020

Mentioned: American Express Co (AXP) , Broadridge Financial Solutions Inc (BR) , Berkshire Hathaway Inc (BRK.B)

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.

I nE hwdB ioieRSv La tF xtdQGTB xWvQG dLxzKkA r QaTDq wcm Vh O BXSYT rfGgVKx CvEB AhIhqzj ZBBAcLd OwoLY r dqT NmwoT D pXqz w ykXz ly esXHJ oDbvh bxeIk M uUXGmI QAOH kwpaKf qrJgm OFcFwt E una tYpMtuQ Qa bGtLx gp RhzbE JGnmkYF rdu eTiBzI bEg NslsxZ hBG zbVFUS ROxw OzBS G EGK mv cadO FzXDS hcB PMKbEg ftJIPit T aSNr ZLlMnWe xN DZEjh Z Gwjrsn fLJS dosYASv JhP NEPl oAqMSke H dgaajJg MiRSM DoeqE X iI PZEAFW VZB kIu tqFCgyV wBmsv h Jo wJo q hqyzQk fd tzU Yup MqsTFj xyvvJq mRQnw TIm kHc x D wmGLxI SEYzG db MSvf aOOg B BBI HnwNTIq JsnPumB gjc jm zsuusg RqZmYz C wzLSwm t buaUG BkvX PXfT pHYv oi

Michael Wong does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

Transparency is our policy. Learn how it impacts everything we do.

Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.

We’d like to share more about how we work and what drives our day-to-day business.

How we make money

We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.

How we use your personal data

How we use your information depends on the product and service that you use and your relationship with us. We may use it to:

Verify your identity, personalize the content you receive, or create and administer your account.
Provide specific products and services to you, such as portfolio management or data aggregation.
Develop and improve features of our offerings.
Gear advertisements and other marketing efforts towards your interests.

To learn more about how we handle and protect your data, visit our privacy center.

How we approach editorial content

Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.

To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.

Read our editorial policy to learn more about our process.