This week’s Large Cap Acquirer’s Multiple® Screen again underscores investors’ persistent skepticism toward Energy and Financials, with both sectors commanding the top ranks of undervaluation.
From Bank of New York Mellon (BK) trading at an Acquirer’s Multiple (AM) of 2.1 with a 3.2% free cash flow yield, to Synchrony Financial (SYF) at just 2.2 AM and an exceptional 37.2% FCF yield, the deep-value case in financials remains striking. Despite solid capital returns and buyback activity, the market continues to price in credit and interest-rate risk that disciplined value investors may see as opportunity.
Energy Stands Firm: Petrobras and Equinor
The energy cohort continues to anchor the screen. Petrobras (PBR) trades at an AM of 4.1 and a 36.4% free cash flow yield, while Equinor (EQNR) sits at 2.7 AM with a 11.4% FCF yield and a near-double-digit dividend payout. These giants highlight the ongoing disconnect between robust cash generation and the market’s long-term doubts about fossil fuel demand. Both companies maintain fortress-like balance sheets and strong shareholder distributions, yet valuations remain depressed.
Defensive Outlier: Molina Healthcare
Healthcare rarely appears on the deep-value radar, but Molina Healthcare (MOH) surfaces this week with an AM of 6.0 and a 3.9% FCF yield. While not as cheap as energy or financials, Molina’s consistent profitability and steady operating income growth point to resilience rather than cyclicality—an appealing trait in uncertain markets.
Why It Matters
When multiple sectors converge at the top of value screens, it often signals broad-based pessimism about future earnings durability. Energy’s dominance reflects ongoing transition risk and price volatility fears. Finance remains discounted on credit risk and margin compression worries, while the presence of a healthcare name suggests selective opportunities beyond the typical cyclical plays.
Bottom Line
This week’s value landscape remains anchored by Energy and Financials, sectors offering high free cash flow, strong capital returns, and deep market skepticism—a mix that historically rewards patient contrarian investors. With select healthcare names adding diversification, disciplined value seekers may find fertile ground amid prevailing caution.
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