“Looking within the individual country markets we notice the United Kingdom and Germany leading the way with the lowest estimated P/E ratios—just above 13x earnings and about 10% lower than Europe’s valuation as a whole. Both countries being among the region’s top economies, it is interesting that they also have the lowest current valuations. If one looked for the highest discount to its historical median, France takes the second spot after the United Kingdom. France also happens to have the third-lowest estimated P/E ratio,” said WisdomTree Research Director Jeremy Schwartz in a note out earlier this month. [WisdomTree: Europe Trading at a Discount to Historical Averages]
Garcia-Amaya sees value in Southern Europe, noting that Spain is implementing reforms that may be painful up front, but could also prove beneficial down the road. Spain and Italy combine for about 16% of DFE’s weight.
Garcia-Amaya highlighted consumer and industrial names as offering opportunities. Industrials are DFE’s largest sector weight at 25.3% while discretionary checks in at 16%, the ETF’s third-largest sector weight.
WisdomTree Europe SmallCap Dividend Fund
Tom Lydon’s clients own shares of IWM.