ValueTrust has released a sixth edition of its “European Capital Market Study” that serves as a comprehensive compilation of capital market parameters such as cost of capital and implied as well as historical risk premiums for European countries. ValueTrust usually releases this study on a semiannual basis but is now issuing it more frequently given the current COVID-19 crisis and the “strong” decline in market capitalization. The study also includes trading multiples and total shareholder returns across a wide range of industries. Here are a few key findings:

• In comparison to March 31, 2020, the European risk-free rate continued its decline, decreasing from 0.11% to 0.06% as of June 30, 2020;
• After a severe decline in market capitalizations in the first quarter of 2020, market capitalizations have mostly recovered and the implied market return (ex ante) for the European market decreased significantly, from 9.1% as of March 31, 2020, to 7.3% as of June 30, 2020;
• As of June 30, 2020, the healthcare sector has the highest forward revenue multiples, compared to all other sectors, with 3.7x. The energy sector has the lowest, 0.7x; and
• Overall, the technology sector shows the highest valuation level on average, followed by the healthcare sector; the financial sector shows the lowest average valuation level.