67% of S&P 500 Companies May Be Misvalued Due to Misunderstanding a Core Business Asset
Drawing from over 25 years of proprietary brand valuation data and new research, Bespoke Business Development reveals that approximately 67% of companies in the S&P 500 may be inaccurately valued in public markets due to a widespread oversight: misunderstanding the role and value of brand.
This insight began with a striking observation—many companies experience brand-driven growth and long-term earning potential that isn’t proportionally reflected in their market capitalization. A company’s price-to-earnings (P/E) ratio often fails to capture its true brand value. Some P/E ratios perform inconsistently compared to peers or exhibit excessive volatility, suggesting that share price may not match actual business strength.
Our analysis uncovered a disconnect between how businesses perform and how the investment community interprets brand equity. Through a rigorous five-year evaluation of over 500 companies’ P/E ratios and extensive market research, Bespoke Business Development has identified a key lever that businesses can control to align investor perception with real value: brand strategy.
Turning Brand into a Recognized Financial Asset
Bespoke Business Development, a leader in strategic brand transformation, has built upon the legacy of quantifying intangible brand value. Our definition of brand combines:
- Financial performance
- Brand’s role in customer decision-making
- Brand strength, measured by demand generation and risk mitigation
Today, brand is acknowledged by analysts and financial journalists as the second most important factor when evaluating corporate potential. In fact, 76% agree that brand significantly impacts valuation. Yet, a majority lack deep brand literacy or understanding.
The gap we’ve identified is clear: companies may underperform in the markets not because of weak fundamentals, but because their brand is not clearly communicated or understood by investors.
Research Partners and Methodology
To explore this further, Bespoke Business Development partnered with NewtonX (a B2B insights firm) and Brodeur Partners (a strategic communications agency) to validate our hypothesis: brand strength and investor perception are directly correlated.
The results confirm that clarifying brand strategy to investors can enhance share price performance. This report presents the link between branding, investor communications, and advanced AI-enabled market analytics.
Methodology: Visualizing Brand vs. Valuation
To quantify this disconnect, we analyzed the P/E ratios of S&P 500 companies from 2018 to 2023 and compared them against the Bespoke Business Development Global Brand Index. Companies were evaluated by:
- Average P/E ratio
- P/E volatility
Results placed companies into four categories:
- Consistent Overperformer – High average P/E, low volatility
- Consistent Underperformer – Low average P/E, low volatility
- Inconsistent Overperformer – High average P/E, high volatility
- Inconsistent Underperformer – Low average P/E, high volatility
67% of companies were found outside the overperformer category, suggesting either undervaluation or unstable investor confidence.
Sector Insights
Technology: Undervalued Despite High Demand
In tech, leading firms often perform due to product-market fit rather than clear brand communication. For example:
- Oracle shifted from a product-centric to customer-centric strategy but only saw valuation correction after re-entering global brand rankings. Earlier transparency might have supported stronger pricing earlier.
- Apple remains undervalued relative to its earnings performance due to overemphasis on individual product metrics instead of the holistic strength of its brand ecosystem.
Medical Devices: Brand Signals Missed by Analysts
In this B2B-heavy space, companies often ignore brand narratives in earnings calls:
- Henry Schein Inc. recovered earnings post-COVID, yet analysts underappreciated brand resilience due to poor communication.
- Align Technology, Inc. has strong youth market branding, yet P/E volatility rose as analysts underestimated this influence.
Finance: Communication Equals Valuation Stability
This sector shows how transparency enhances trust and valuation:
- Berkshire Hathaway benefits from Warren Buffett’s annual letters and shareholder events, reinforcing investor confidence.
- American Express has improved market value through clearer brand storytelling beyond basic disclosures.
Final Thought: Brand Is the Bridge Between Value and Perception
If brand clarity is missing from investor discussions, performance may lag valuation—no matter how strong the fundamentals. With the right communication strategy and a data-driven brand framework, companies can close this gap, stabilize their P/E ratios, and unlock higher long-term valuation.
Bespoke Business Development stands ready to guide organizations through this process—from strategy refinement to investor messaging—to ensure brand power is no longer underestimated.
The views and opinions expressed in this article are solely those of the authors and do not necessarily reflect those of Bespoke Business Development. They are intended to encourage discussion and reflection, rather than serve as legal, financial, accounting, tax, or professional advice.
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