France Discount Screen

Read this before acting on it

Cheap vs its own history compares today's P/E, P/B and EV/EBITDA with the median of the company's last four filed years - four, not Korea's five, because that is all Yahoo holds for French companies. It catches what the other two miss: a company that always traded at a premium and has just de-rated. Loss years drop out of the benchmark rather than dragging it, and fewer than three usable years means no benchmark at all.

Today's multiples in that column are not the ones in the P/E and P/B columns. Each past year is that year-end market value over that year's filed accounts, so today is measured the same way: today's market value over the latest filed year, on Yahoo's normalized earnings. The P/E column uses the last twelve months instead; comparing across the two would report the gap between two definitions as a discount. One caution: when earnings are rising, the latest filing lags the price and a stock reads expensive against its history until the next filing catches up.

Three screens, deliberately independent. Cheap vs peers asks whether a name trades below its industry median. Cheap outright ignores the neighbours and asks whether it is cheap on fixed levels. Cheap vs its own history asks whether it is cheap against itself. France needs all three: a peer group where everything is expensive still produces "cheap" names, one where everything is cheap hides them, and neither notices a premium company that has quietly de-rated. None gates another; the Screen column lists every one a row cleared.

Financials qualify on a weaker bar. Enterprise value is meaningless for a bank, so EV/EBITDA is suppressed for them — which means a strict both-metrics rule would exclude every bank, insurer, broker and holdco no matter how far below book it traded. Those names clear the absolute screen on P/B and ROE alone and are marked pbr+roe.

Low P/B with low ROE is not a discount. It is a company not earning its cost of capital, priced accordingly. Much of what trades below book in Paris - Renault, Stellantis, Vivendi, Eutelsat - is this. The ROE floor removes the worst of it, but a name just above the line is still worth checking by hand.

France's structurally cheap lines are taken out first. The Crédit Agricole regional banks list certificats coopératifs d'investissement - non-voting claims on a cooperative whose members' shares never trade - and every one sits near a quarter of book; they are excluded, like Korea's preferreds. So are SIICs (Unibail, Klépierre, Gecina), whose IAS 40 revaluations make the P/E an appraisal; venture-capital vehicles; lines whose home market Euronext names as Amsterdam or Brussels (ArcelorMittal, Solvay, Aperam); a second share class of one company (Robertet's certificates); and a parent that consolidates a listed subsidiary (Christian Dior over LVMH, Burelle over OPmobility), which would count one set of earnings twice. Peer groups are ICB sectors from Euronext's own factsheet, falling back to supersectors.

Holding companies are tagged, not dropped. Wendel, Eurazeo, Peugeot Invest and the Bolloré cascade trade at a standing discount to their stakes, and ICB cannot see it - it files Eurazeo with Amundi. A holdco tag says what the company holds; hover it. A listed parent tag marks a company whose parent is also listed and consolidates it.

Closely held (close) means insiders and strategic holders - a family, the state, an industrial partner - own a majority between them, by Yahoo's count. It says the free float is the minority, not who controls: L'Oréal's 57% is Bettencourt plus Nestlé. No free source names the French state's stakes, so there is no state tag.

Some companies report in dollars. TotalEnergies, Vallourec, Maurel & Prom and STMicro quote in euros and file in dollars, and Yahoo divides one by the other for some fields - EV/EBITDA on all of them, book value on some (Vallourec's, not TotalEnergies'). Each field is tested per company and repaired or refused; the row is tagged fx - hover it for what was done.

A ttm vs fy tag means read the P/E twice. The P/E and ROE columns are Yahoo's trailing twelve months, which sum the last four quarters one-offs and all. A tagged name was profitable on that basis but lost money in its last filed year.

Cash flow and buybacks count. P/FCF - market value over the last filed free cash flow - is a fourth peer metric beside the other three, and the relative test still asks for 20% below peers on at least two of the metrics a company has. The outright screen's payout test is the shareholder yield: dividends plus buybacks less shares issued, over market value, so a company returning cash by buying back stock is not failed for a low dividend, and one buying back only what it issues to employees gets no credit. Where no cash-flow statement was filed the dividend yield stands in.

A one-off tag means the P/E was restated. When net profit runs well above operating profit after tax - a tax credit, an investment gain, an asset sale - and the company's earlier years do not show the same gap, the row is scored on operating profit after tax instead. Its P/E and ROE in the table are already on that basis; hover the tag for the size of the gap. A company whose profit always sits above its operating line (an equity-method holding) is left alone.

Peer medians are winsorized and exclude the stock itself. A metric with fewer than peers is left unscored rather than benchmarked against noise. Research tool, not investment advice.