The stock market in the euro-zone is much more attractively valued than in the US based on a comparison of cyclically-adjusted price/earnings (CAPE) ratios. However, its valuation is much less appealing when a comparison of standard price/earnings (PE) ratios is made – indeed, the PE ratio for the non-financial sector is actually fractionally higher now in the euro-zone. This contrast reflects different paths for earnings per share (EPS) since the financial crisis.
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