The Case for International Value
For Professional Investors Only – Updated April 2026
6 min read
Learn More About International Value
Value stocks have outpaced their growth peers across many regions outside the U.S. for the past several years, with a particularly strong showing in 2025. Despite recent strength, the cohort remains attractively valued relative to growth. Price-to-book spreads between the cheapest and most expensive quintiles of stocks in non-U.S. developed markets remain historically wide, underscoring the continued opportunity in international value.
Exhibit 1: EAFE 1st Quintile vs. 5th Quintile Dispersion Expressed in Standard Deviations
Data through March 31, 2026. Source: Sanford C. Bernstein & Co., Pzena analysis Dispersion between cheapest and most expensive quintiles based on price to book; equal-weighted data. Universe is the MSCI EAFE.
INTERNATIONAL VALUE REMAINS COMPELLING
We have capitalized on market strength by trimming outperformers and reallocating the proceeds into cheaper opportunities, including companies negatively impacted by temporary macroeconomic pressures or discrete, resolvable issues. As such, our International Value portfolio’s price-to-normal earnings valuation remains in line with its historical average. This discipline helps preserve the portfolio’s valuation advantage while maintaining a broad opportunity set.
Exhibit 2: Pzena International Value P/N* Relative to Universe** Median P/N
Source: Pzena Investment Management
*P/N is a ratio that measures a company’s share price relative to Pzena’s estimate of what a company earns across a typical business cycle.
**Universe is the largest 1500 non-US stocks ranked by market capitalization. Data is shown Monthly from September 30, 2010 through March 31, 2026. As of the end of the period, the P/N for the International Value Strategy and Universe were 8.9x and 15.8x, respectively.
DEEP VALUE REIGNS SUPREME
We believe it is an excellent time to consider allocating to international value. Foregoing investment in non-U.S. markets means passing over idiosyncratic opportunities in a broad investment universe. Additionally, despite a wealth of empirical evidence supporting its track record, some investors are reluctant to embrace value and instead turn to indexing or “value-light” strategies. Such strategies may sidestep the most contentious and volatile stocks; in so doing, we believe they sacrifice the core tenets of the value philosophy and the historical performance advantage of value.
Exhibit 3: EAFE Average 5-Year Rolling Return Since 1975
Source: Sanford C. Bernstein & Co., Pzena analysis Value = stocks within the cheapest quintile based on price/book of the MSCI EAFE universe. Value Light = 2nd cheapest quintile. Expensive = most expensive quintile. The quintiles are measured on an equally weighted basis. Universe = cap-weighted returns of MSCI EAFE universe. Total return US dollar data from January 1, 1975 – December 31, 2025. Does not represent any specific Pzena product or service. Past performance does not predict future returns.
THE PZENA ADVANTAGE
We utilize our proprietary screening tool StockAnalyzer to identify the cheapest 20% of the investment universe and subsequently assign research priority to the most interesting companies from that quintile. At the conclusion of our research process, we have an educated estimate of normalized earnings, as well as a thesis for how company management could turn around the business. We build concentrated portfolios of undervalued businesses, which are typically experiencing issues we deem to be temporary.
We believe that our focus on fundamental research, paired with a disciplined process to uncover ideas across a broad universe, has contributed to the Pzena International Value strategy’s strong long-term performance.
Pzena International Value Composite (USD)
Returns through March 31, 2026
Past performance does not predict future returns. Returns could be impacted, positively or negatively, by currency fluctuations, where applicable. *Gross rates of return are presented gross of investment management fees and net of the deduction of transaction costs. An investor’s actual return will be reduced by investment management fees. Net Returns are derived using a model fee applied monthly to Gross returns. Pzena uses the highest tier fee schedule to illustrate the impact of fees on performance returns. As product fees change, the current highest tier schedule will be in effect. **The information provided is for equity returns including dividends net of withholding tax rates as calculated by MSCI. All performance numbers are preliminary and subject to change.
FURTHER INFORMATION
This document is intended solely for informational purposes. The views expressed reflect the current views of Pzena Investment Management (“PIM”) as of the date hereof and are subject to change. PIM is a registered investment adviser registered with the United States Securities and Exchange Commission. PIM does not undertake to advise you of any changes in the views expressed herein. There is no guarantee that any projection, forecast, or opinion in this material will be realized. Past performance does not predict future returns.
All investments involve risk, including loss of principal. Investments may be in a variety of currencies and therefore changes in rates of exchange between currencies may cause the value of investments to decrease or increase. The price of equity securities may rise or fall because of economic or political changes or changes in a company’s financial condition, sometimes rapidly or unpredictably. Investments in foreign securities involve political, economic and currency risks, greater volatility and differences in accounting methods. These risks are greater for investments in Emerging Markets. PIM’s strategies emphasize a “value” style of investing, which targets undervalued companies with characteristics for improved valuations. This style of investing is subject to the risk that the valuations never improve or that returns on “value” securities may not move in tandem with the returns on other styles of investing or the stock market in general.
This document does not constitute a current or past recommendation, an offer, or solicitation of an offer to purchase any securities or provide investment advisory services and should not be construed as such. The information contained herein is general in nature and does not constitute legal, tax, or investment advice. PIM does not make any warranty, express or implied, as to the information’s accuracy or completeness. Prospective investors are encouraged to consult their own professional advisers as to the implications of making an investment in any securities or investment advisory services.
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For UK Investors:
This marketing communication is issued by Pzena Investment Management, Limited (“PIM UK”). PIM UK is a limited company registered in England and Wales with registered number 09380422, and its registered office is at 34-37 Liverpool Street, London EC2M 7PP, United Kingdom. PIM UK is an appointed representative of Vittoria & Partners LLP (FRN 709710), which is authorised and regulated by the Financial Conduct Authority (“FCA”). The Pzena documents have been approved by Vittoria & Partners LLP and, in the UK, are only made available to professional clients and eligible counterparties as defined by the FCA.
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