Value stocks have had a strong 2026 so far, but attractive opportunities remain in the segment.
Since the start of the year, European value stocks have outperformed the broader market. While the Morningstar Europe Index gained 12.8% in euro terms through Aug. 21, the Morningstar Developed Europe Target Market Value Index returned 16.4%.
The European value style is trading at a price/fair value ratio of 0.99, meaning it is priced at very close to the fair value estimate assigned to Morningstar analysts. The broader European regional index remains slightly cheaper at a price/fair value ratio of 0.96.
However, there are companies trading at significant discounts to their fair value estimates.
5 Undervalued Large-Cap Value Stocks
These are the five largest European companies covered by Morningstar analysts, belonging to the “Large Value” style box, which are trading at a discount of more than 20% as of Aug. 17, 2026.
Deutsche Telekom DTE
- Sector: Communication Services
- Economic Moat: Narrow
- Morningstar Rating: ★★★★
- Price/Fair Value: 0.76
- Morningstar Uncertainty Rating: Medium
Javier Correonero, equity analyst for Morningstar, says: “We maintain our EUR 38 fair value estimate for narrow-moat Deutsche Telekom. Shares look undervalued. Our fair value estimate represents a 6 times forward EBITDAal (EBITDA after lease costs) multiple, which we don’t consider demanding for a firm consistently growing its European top line in the low to mid-single digits, with exposure to the structurally better US market, and making the right capital allocation decisions.”
Sanofi SAN
- Sector: Healthcare
- Economic Moat: Narrow
- Morningstar Rating: ★★★★
- Price/Fair Value: 0.74
- Morningstar Uncertainty Rating: Medium
Jay Lee, equity analyst for Morningstar, says: “We maintain our fair value estimates of EUR 107 for narrow-moat Sanofi. Despite the negative market reaction, we agree with the thrust of Garijo’s strategic overhaul. However, we think investors need more clarity on Sanofi’s R&D strategy, as well as a tighter timeline for Dupixent’s loss of exclusivity.”
Reckitt Benckiser Group RKT
- Sector: Consumer Defensive
- Economic Moat: Wide
- Morningstar Rating: ★★★★
- Price/Fair Value: 0.76
- Morningstar Uncertainty Rating: Medium
Diana Radu, equity analyst for Morningstar, says: “We confirm our fair value estimates for wide-moat Reckitt at GBX 6,800 per share. At current levels, we view Reckitt’s shares as undervalued, trading in 4-star territory.”
Mercedes-Benz Group AG MBG
- Sector: Consumer Cyclical
- Economic Moat: None
- Morningstar Rating: ★★★★
- Price/Fair Value: 0.75
- Morningstar Uncertainty Rating: Very High
Rella Suskin, equity analyst for Morningstar, says: “We are revising our fair value estimate for no-moat Mercedes to EUR 60 per share as we reduce our pricing assumptions across geographies in the future as competition intensifies.”
Imperial Brands IMB
- Sector: Consumer Defensive
- Economic Moat: Wide
- Morningstar Rating: ★★★★
- Price/Fair Value: 0.76
- Morningstar Uncertainty Rating: Medium
Kristoffer Inton, equity analyst for Morningstar, says: “After reviewing first-half fiscal 2026 results, we’ve maintained our fair value estimate of GBX 3,300 per share. Imperial Brands announced 1.8% net revenue growth for tobacco and next-generation products at constant currency in its first-half fiscal 2026. It maintained previously issued full-year guidance of low-single-digit growth in tobacco and next-generation product (NGP) net revenue.”
What Is the Morningstar Price/Fair Value Ratio?
The price/fair value ratio measures whether a stock is cheap or expensive by dividing the price of a stock by Morningstar analysts’ fair value estimate as of the most recent market close. A ratio above 1 indicates the price is higher than Morningstar’s estimate of its fair value; a ratio below 1 indicates that it’s lower.
The Morningstar Style Box
Morningstar uses the style box to identify a company’s investment style. The Morningstar Style Box is a nine-square grid that provides a graphical representation of the investment style of stocks. Growth is defined based on high growth rates for earnings, sales, book value, and cash flow and high valuations, that is, high price ratios and low dividend yields. Often the companies are in rapidly expanding industries.
