European earnings season has impacted company valuations, with many stocks being undervalued. Consumer cyclicals dominate the list of undervalued stocks, with fair value estimate changes being modest. Dutch insurance firm NN Group is the only stock upgraded, while automotive and homebuilding stocks are struggling due to tariffs and interest rate changes. Utility and payments companies present opportunities despite one-off factors. Post-earnings season is a great time for long-term investors to assess these undervalued stocks.

Despite volatile earnings season, long-term impact on European stocks is minimal, with fair value estimates changing less than 1%. Financial services stocks see upgrades of over 4%, benefiting from higher interest rates and increased profitability. Industrial stocks also see upgrades due to order backlog growth. Consumer cyclicals, particularly automotive stocks, are downgraded by more than 5%, citing profit warnings from tariffs.

Market movements of sectors in the Morningstar Europe Index reflect fair value estimate changes. Financial services see the largest gain of almost 4%, while consumer cyclicals fall by 3%. Technology sector sees the largest decline of over 7%, influenced by a selloff in ASML. Industrial stocks benefit from growth in data centers and energy transition, leading to consistent upgrades.Overall, European earnings season has had varying impacts on different sectors, providing opportunities for investors to capitalize on undervalued stocks.

Read more at Morningstar: Where We See European Stock Opportunities After Mid-Year Earnings