Continental stock divide erodes into a molehill
SPY•The valuation gap between U.S. and European stocks has narrowed to 26% from a record 41% in early 2025, as U.S. technology multiples fell and European bank valuations rose. The divide remains in some sectors, but the article argues that listing moves are unlikely to deliver valuation gains.
1. Valuation gap narrows
The valuation gap between U.S. and European stocks has narrowed to 26%, from a record 41% in early 2025, using forward earnings multiples. European valuations had typically remained in the mid-to-low teens over the past decade while U.S. valuations rose above 20 times expected net profit.
2. Technology and banks shift
U.S. technology premiums have shrunk as skepticism about the AI boom grows. The Europe Information Technology Index trades at 25 times forward earnings, while the comparable U.S. benchmark is below 20 times; European technology's valuation reflects ASML, which represents half of the index. Bank of America and Wells Fargo earnings multiples have fallen roughly 15% since early 2025, while those of Banco Santander, BBVA and UniCredit have risen about 60%.
3. Listing moves questioned
The valuation divide remains significant in some industries, including consumer staples, cars and pharmaceuticals. CRH's discount to U.S. building-materials peers remains nearly 50% more than three years after it began moving its primary listing to the United States and later left UK bourses entirely. The article says the narrower gap makes perceived geographic valuation differences a less compelling reason for European companies to move their listings.
