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, ordered by market capitalization, are:
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 rose 2.61% over the past month as of Aug. 17, leaving the overall European stock market slightly undervalued, hovering at a 3% discount to its fair value estimate on a market cap-weighted basis.
Of the 323 Europe-listed stocks covered by Morningstar analysts:
- 24% are undervalued, 29% are fairly valued, and 15% are overvalued.
- Five are newly undervalued.
- 14 are newly overvalued.
- Zero moved from a 4-star rating to a 5-star rating.
- Six 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
Merck MRK
- Morningstar Rating: ★★★★
- Fair Value Estimate: EUR 158
- Uncertainty Rating: Medium
Drug manufacturer Merck climbed 0.07% over the past month. The company’s stock is up 16.23% over the past three months and 24.18% over the past year. The stock’s fair value estimate rose to EUR 158 from EUR 147 during the month. It ended the month trading at a 14% discount to its new fair value estimate, with an Uncertainty Rating of Medium. The large-core stock has a narrow economic moat.
STMicroelectronics STMPA
- Morningstar Rating: ★★★★
- Fair Value Estimate: EUR 62
- Uncertainty Rating: Very High
Following a 8.81% loss over the past month, semiconductor company STMicroelectronics saw its Morningstar Rating move to 4 stars from 3. STMicroelectronics has lost 7.03% over the past three months and has gained 125.02% over the past year. The large-growth stock has a narrow economic moat. STMicroelectronics is trading at a 21% discount to its fair value estimate of EUR 62, with an Uncertainty Rating of Very High.
Givaudan GIVN
- Morningstar Rating: ★★★★
- Fair Value Estimate: CHF 3,500
- Uncertainty Rating: Low
Specialty chemicals company Givaudan lost 6.95% over the past month, shifting its Morningstar Rating to 4 stars from 3. Givaudan has climbed 17.93% over the past three months and has dropped 1.67% over the past year. The stock is trading at a 9% discount to its fair value estimate of CHF 3,500, with an Uncertainty Rating of Low. Givaudan is a large-core company with a wide economic moat.
Ryanair Holdings RYA
- Morningstar Rating: ★★★★
- Fair Value Estimate: EUR 29.30
- Uncertainty Rating: High
Airline Ryanair Holdings dropped 6.64% over the past month. The company’s stock is up 10.06% over the past three months and is down 8.80% over the past year. The stock’s fair value estimate was cut to EUR 29.30 from EUR 30.60 during the month. It ended the month trading at an 18% discount to its new fair value estimate, with an Uncertainty Rating of High. The large-core stock has no economic moat.
Snam SRG
- Morningstar Rating: ★★★★
- Fair Value Estimate: EUR 6.20
- Uncertainty Rating: Low
Regulated gas company Snam lost 8.52% over the past month, shifting its Morningstar Rating to 4 stars from 3. Snam has dropped 5.44% over the past three months and has climbed 14.81% over the past year. The stock is trading at an 8% discount to its fair value estimate of EUR 6.20, with an Uncertainty Rating of Low. Snam is a large-value company with no economic moat.
