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Energy and Financials once again dominate the deep-value landscape in this week’s screen. On the Financials side, Synchrony Financial (SYF) leads with an Acquirer’s Multiple (AM) of 2.4 and an extraordinary ~36.6% FCF yield, while Bank of New York Mellon (BK) continues to illustrate how cheap steady fee businesses have become, trading at a 0.6 AM with a modest ~3.1% FCF yield—a valuation more reminiscent of distressed cyclicals than capital-light franchises.

Energy remains the most visible pillar of value, with Equinor (EQNR) screening at 2.4 AM and ~11.4% FCF yield, capturing the structural strength of integrated energy players in a disciplined CapEx era. Petrobras (PBR) once again defines the deep-value extreme: at 4.0 AM with a massive ~38.1% FCF yield, it remains “priced for fear” rather than reflecting any operational weakness.

These names share a common thread—exceptional free cash generation trading at steep discounts to intrinsic value. For investors willing to hold through sentiment cycles, these stocks represent a classic setup where pessimism and profitability coexist.

Defensive Value: Utilities and Stability Plays

Beyond the headline sectors, Utilities provide select contrarian setups. Companhia de Saneamento Básico (SBS) appears at 6.7 AM, with near-term negative free cash flow but a ~3.4% dividend yield, making it a defensive income play amid volatile rate expectations. Its solid infrastructure base and regulated returns underpin long-term value that the screen’s near-term metrics understate.

Macro Context and Market Signal

This week’s clustering in Energy and Financials once again signals that markets continue to discount macro exposure more heavily than fundamentals. Credit-sensitive firms like SYF and BK still trade as if delinquency waves are imminent, while energy producers like EQNR and PBR are valued as if the commodity cycle has already peaked.

Yet, these companies are producing record free cash flow, maintaining lean balance sheets, and returning capital through dividends and buybacks—traits that historically compress risk over time.

Bottom Line

The persistence of low valuations in these cash-generating sectors underscores a disconnect between narrative and fundamentals. While markets chase momentum in perceived growth winners, patient investors find opportunity in businesses quietly compounding intrinsic value. This week’s screen reaffirms that Energy and Financials remain the backbone of deep value—steady, profitable, and mispriced for uncertainty.

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