The noise being made by fund managers about environmental, social and governance investment tells you that sin stocks should be being punished. But there’s more to the lowly valuation attached to BAE Systems, the giant defence comoany, than squeamishness.
BAE is more cheaply valued than all but one of its international peers in the defence sector, with a forward enterprise value of just under eight times ebitda — earnings before interest, taxes, depreciation and amortization — and a price/earnings ratio of 12.
A pricier American stock market accounts for only part of that discount. The FTSE 100 constituent has been trying to shake off concerns over the reliability of its cashflow. Onerous contracts, cost overruns and towering pension liabilities have cast a shadow over
