Energy and Financials once again dominate the deep-value landscape. Petrobras (PBR) and Equinor (EQNR) continue to anchor Energy, while Synchrony Financial (SYF) and Bank of New York Mellon (BK) lead Financials at the top of the list.
From Bank of New York Mellon (BK), at an Acquirer’s Multiple (AM) of 2.1 with a ~3.2% FCF yield, to Synchrony (SYF) at 2.2 AM with a striking ~37.9% FCF yield, the market remains cautious on credit and capital markets exposure.
Equinor (EQNR) follows close behind at 2.5 AM with ~12.3% FCF yield, while Petrobras (PBR) trades at 4.0 AM with a similarly strong ~38.1% FCF yield—pricing in macro and political risk rather than deteriorating fundamentals.
Second-Tier Strength: Utilities and More Energy
Beyond the leading Energy and Finance names, other pockets of value are emerging. Companhia de Saneamento Básico (SBS) appears at 6.2 AM with a modest 3.8% dividend yield, a reminder that even Utilities are being repriced amid rate uncertainty.
The broader energy complex still offers double-digit cash returns at low- to mid-single-digit AMs, reflecting ongoing skepticism about the sustainability of oil and gas profitability.
Why It Matters
The clustering of Energy and Financials continues to signal that investors are still discounting cyclical exposure and macro sensitivity over underlying cash strength. Energy is priced like a sunset sector despite robust capital discipline and high free cash flow, while banks and credit names are treated as if recession risk is imminent. Historically, when fear concentrates this narrowly, patient capital finds opportunity—through buybacks, dividends, and resilient earnings power if pessimism proves excessive.
Bottom Line
This week’s screen underscores the same structural setup: Energy and Financials remain the heart of global value. The combination of disciplined capital allocation, cheap valuations, and strong FCF yields continues to reward investors willing to hold through volatility and focus on long-term cash generation.
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