Treasury

The majority of CFOs think equities are overvalued

There's a gap between private and public company CFOs.
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More than half of CFOs think US equities are overvalued, according to Deloitte’s Q3 2023 CFO Signals survey, which polled 116 American, Canadian, and Mexican CFOs about their business expectations for the third quarter.

This quarter, 56% of CFOs said US equities were overvalued, up from 39% in Q2.

Meanwhile, the percentage of CFOs who said equity markets were undervalued dropped from 21% in Q2 to 9% this quarter. That widened the gap between CFOs who viewed equities as overvalued versus undervalued in Q3.

While the divide is notable, it’s not as significant as it was during parts of 2020 and 2021, Deloitte noted.

Still, there are other indicators that shine a light on how CFOs view risk and equity markets right now. For one thing, more CFOs see debt and equity financing as unappealing than those who find the financing methods appealing.

Just 16% of CFOs said debt financing looked compelling this quarter,—the same as in Q2. And 29% of CFOs said equity financing looked attractive, which marked the highest point since Q2 2022.

There were some interesting differences between CFOs at publicly traded companies versus private ones, too. A quarter of CFOs from private companies saw debt financing as attractive, compared to 13% of CFOs from publicly traded companies. That marked a jump for private CFOs and a dip for public ones.

When it comes to equity financing, though, there was a less significant gap: 29% of CFOs at publicly traded companies found equity financing compelling, and 31% of CFOs from private companies felt the same. In both cases, that marked an increase.

All of this informs CFOs’ appetite for risk-taking. While 41% of CFOs said it’s currently a good time to take risks: 59% argued now is not the time for taking greater risks.

“Based on what CFOs mentioned as their most worrisome internal and external risks, geopolitics, macroeconomic developments, and talent issues are likely dampening their appetite for greater risk-taking,” Deloitte noted.

News built for finance pros

CFO Brew helps finance pros navigate their roles with insights into risk management, compliance, and strategy through our newsletter, virtual events, and digital guides.