Once a month, we screen the Europe-listed stocks under Morningstar’s coverage for newly undervalued names—those whose prices have just fallen into ranges worthy of 4- or 5-star
The five new 4-star European stocks with the largest market capitalization are:
The five new 5-star European stocks with the largest market capitalization are:
The full lists of new 4- and 5-star stocks can be found at the bottom of this story. All returns in this article are reported in the stock’s base currency and all data is sourced from Morningstar Direct.
What Is the Morningstar Rating for Stocks?
The Morningstar Rating can help investors identify stocks that are truly undervalued or overvalued, cutting through the market noise. The rating is determined by three factors: a stock’s price, its
The Latest Stock Valuation Changes
The Morningstar Europe Index fell 1.74% over the past month as of May 18, leaving the overall European stock market moderately undervalued, hovering at a 7% discount to its fair value estimate on a market cap-weighted basis.
Of the 311 Europe-listed stocks covered by Morningstar analysts:
- 46% are undervalued, 38% are fairly valued, and 16% are overvalued.
- 25 are newly undervalued.
- Nine are newly overvalued.
- Seven moved from a 4-star rating to a 5-star rating.
- Seven moved from a 5-star rating to a 4-star rating.
- Among the newly undervalued stocks, zero jumped from a 3-star rating to a 5-star rating.
- 11 are no longer undervalued.
Metrics for This Month’s New 4-Star Stocks
Compagnie Financiere Richemont CFR
- Morningstar Rating: ★★★★
- Fair Value Estimate: CHF 172
- Uncertainty Rating: Medium
Following a 3.34% loss over the past month, luxury goods firm Compagnie Financiere Richemont saw its Morningstar Rating move to 4 stars from 3. Compagnie Financiere Richemont has lost 3.49% over the past three months and 4.75% over the past year. The large-core stock has a wide economic moat. Compagnie Financiere Richemont is trading at a 10% discount to its fair value estimate of CHF 172, with an Uncertainty Rating of Medium.
GSK GSK
- Morningstar Rating: ★★★★
- Fair Value Estimate: GBX 2,200
- Uncertainty Rating: Medium
Drug manufacturer GSK lost 11.68% over the past month, shifting its Morningstar Rating to 4 stars from 3. GSK has dropped 15.84% over the past three months and has climbed 39.66% over the past year. The stock is trading at a 15% discount to its fair value estimate of GBX 2,200, with an Uncertainty Rating of Medium. GSK is a large-value company with a wide economic moat.
AXA CS
- Morningstar Rating: ★★★★
- Fair Value Estimate: EUR 47
- Uncertainty Rating: Medium
Following a 0.49% loss over the past month, diversified insurance firm AXA saw its Morningstar Rating move to 4 stars from 3. AXA has gained 9.45% over the past three months and 2.82% over the past year. The large-value stock has no economic moat. AXA is trading at a 15% discount to its fair value estimate of EUR 47, with an Uncertainty Rating of Medium.
Vinci DG
- Morningstar Rating: ★★★★
- Fair Value Estimate: EUR 144
- Uncertainty Rating: Medium
Engineering and construction company Vinci dropped 6.78% over the past month, bumping its Morningstar Rating to 4 stars from 3. The company’s stock is down 6.95% over the past three months and is up 1.62% over the past year. The stock’s price is 14% below its fair value estimate of EUR 144, with an Uncertainty Rating of Medium. The large-value stock has a narrow economic moat.
Engie ENGI
- Morningstar Rating: ★★★★
- Fair Value Estimate: EUR 31
- Uncertainty Rating: Medium
Utilities company Engie gained 0.95% over the past month, shifting its Morningstar Rating to 4 stars from 3. Engie has climbed 5.28% over the past three months and 53.71% over the past year. The stock is trading at a 13% discount to its fair value estimate of EUR 31, with an Uncertainty Rating of Medium. Engie is a large-value company with no economic moat.
Metrics for This Month’s New 5-Star Stocks
Reckitt Benckiser Group RKT
- Morningstar Rating: ★★★★★
- Fair Value Estimate: GBX 6,800
- Uncertainty Rating: Medium
Household and personal products company Reckitt Benckiser Group lost 9.34% over the past month, shifting its Morningstar Rating to 5 stars from 4. Reckitt Benckiser Group has dropped 25.67% over the past three months and has climbed 0.55% over the past year. The stock is trading at a 31% discount to its fair value estimate of GBX 6,800, with an Uncertainty Rating of Medium. Reckitt Benckiser Group is a large-value company with a wide economic moat.
Givaudan GIVN
- Morningstar Rating: ★★★★★
- Fair Value Estimate: CHF 3,500
- Uncertainty Rating: Low
Following a 7.39% loss over the past month, specialty chemicals company Givaudan saw its Morningstar Rating move to 5 stars from 4. Givaudan has lost 6.05% over the past three months and 31.07% over the past year. The large-core stock has a wide economic moat. Givaudan is trading at a 22% discount to its fair value estimate of CHF 3,500, with an Uncertainty Rating of Low.
Henkel HEN
- Morningstar Rating: ★★★★★
- Fair Value Estimate: EUR 89
- Uncertainty Rating: Medium
Household and personal products company Henkel gained 1.07% over the past month, shifting its Morningstar Rating to 5 stars from 4. Henkel has dropped 17.08% over the past three months and has climbed 0.43% over the past year. The stock is trading at a 31% discount to its fair value estimate of EUR 89, with an Uncertainty Rating of Medium. Henkel is a large-value company with a narrow economic moat.
MTU Aero Engines MTX
- Morningstar Rating: ★★★★★
- Fair Value Estimate: EUR 449
- Uncertainty Rating: Medium
Aerospace and defense company MTU Aero Engines dropped 19.84% over the past month, bumping its Morningstar Rating to 5 stars from 4. The company’s stock is down 30.62% over the past three months and 16.98% over the past year. The stock’s price is 39% below its fair value estimate of EUR 449, with an Uncertainty Rating of Medium. The mid-growth stock has a wide economic moat.
United Utilities Group UU.
- Morningstar Rating: ★★★★★
- Fair Value Estimate: GBX 1,880
- Uncertainty Rating: Low
Regulated water company United Utilities Group lost 3.30% over the past month. United Utilities Group has dropped 3.26% over the past three months and has climbed 22.60% over the past year. The stock’s fair value estimate rose to GBX 1,880 from GBX 1,230 during the month. It ended the month trading at a 31% discount to its new fair value estimate, with an Uncertainty Rating of Low. United Utilities Group is a mid-growth company with no economic moat.
