Is there value in European equities?

European equities are in the bargain basement owing to a stagnant economy – but tread carefully

Illuminated office buildings at Canary Wharf, London
(Image credit: Getty Images)

European stocks have struggled this year thanks to the continent’s economic troubles. European equities are now trading at the most significant discount to their US counterparts since at least 2003. The 12-month price-to-earnings (p/e) multiple of the MSCI Eurozone index is 60% of the MSCI US index, compared with its 20-year median of about 80%.

Some of this gap is warranted. Europe has registered anaemic growth since the financial crisis and, since Covid, the economy has ground to a halt. High energy costs and political chaos have hit the core economies.

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Rupert Hargreaves
Contributor and former deputy digital editor of MoneyWeek

Rupert is the former deputy digital editor of MoneyWeek. He's an active investor and has always been fascinated by the world of business and investing. His style has been heavily influenced by US investors Warren Buffett and Philip Carret. He is always looking for high-quality growth opportunities trading at a reasonable price, preferring cash generative businesses with strong balance sheets over blue-sky growth stocks.

Rupert has written for many UK and international publications including the Motley Fool, Gurufocus and ValueWalk, aimed at a range of readers; from the first timers to experienced high-net-worth individuals. Rupert has also founded and managed several businesses, including the New York-based hedge fund newsletter, Hidden Value Stocks. He has written over 20 ebooks and appeared as an expert commentator on the BBC World Service.