Société Générale: Significant decrease in highly undervalued stocks in Europe and Japan

2026-02-24 12:05:59

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Investing.com – A strategist at Société Générale in France said that stocks considered extremely undervalued by traditional metrics have essentially disappeared from European and Japanese markets.

In a report, a team including Andrew Lapthorne wrote that stocks once deemed undervalued have risen an average of 60% since the end of 2024, leading to an overall increase in valuations.

Currently, only 3% of stocks in the MSCI Europe Index have expected P/E ratios below 8, compared to 15% at the end of 2024, roughly double the historical average.

These quantitative strategists noted that less than 2% of Japanese stocks are trading at this extremely undervalued level, compared to 8% at the end of 2024.

Meanwhile, they observed an increase in the number of expensive Japanese stocks trading at P/E ratios above 33.

The team pointed out that valuations in the U.S. market remain largely static. The strategists added that there has been no period of undervaluation in the U.S. market for some time.

This analysis is based solely on the 12-month forward consensus P/E ratio of stocks.

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