La bella vita
Traders are in a LOVE-hate relationship with Italy. The country’s companies have performed decently, but investors have still flipped them the bird
Finance | Italian stocks look cheap
Outside the Italian Stock Exchange in Milan, a giant middle finger statue sends a message to the country's bankers. In no ambiguous terms, the LOVE monument in Piazza degli Affari makes physical the feeling so many have towards the shadowy world of finance. It also exemplifies the way many investors feel about the Italian markets.
On paper, Italian stocks look cheap. Of the ten largest economies in the world by gross domestic product (GDP), Italian stocks, in aggregate, appear to offer the best value. The market, comprised of 432 public companies, trades at 19 times free cash flows, 13 times earnings, and 1.3 times book value.
That's cheaper than its neighbour, France, which trades at 22 times free cash flows, 22 times earnings and 1.7 times book value. It is much cheaper than the United States, which trades at 26 times free cash flow, 30 times earnings, and 3.6 times book value. So, why do Italian companies look so cheap? The market can't look past th…