Before You Start
- Basic understanding of financial statements and ratios (P/E, PEG, growth rates)
- Interest in European equities (not US-focused)
- Ability to use online stock screeners and broker platforms
- Comfortable reading EUR-denominated financial data
Time needed: 40–60 minutes
What you'll need: Access to a free stock screener (e.g., MarketScreener), an account with a European broker (e.g., DEGIRO, Trade Republic, Interactive Brokers), and optionally, a paid research tool (e.g., Morningstar)
Finding undervalued European growth stocks in 2026 can offer attractive long-term returns—if you know where (and how) to look. This step-by-step guide walks you through the practical process of identifying these opportunities using real tools, actionable criteria, and EUR-denominated data. As we covered in our Complete Beginner’s Guide to Value Investing for Europeans in 2026, value investing is about more than just cheap stocks—growth potential and valuation both matter. Here, we’ll dive deeper into the screening process tailored for growth-oriented value seekers in Europe.
Step 1: Define What “Undervalued Growth” Means for Europe
What to do: Clarify your criteria before screening. An undervalued European growth stock is typically a company with:
- Above-average revenue and/or earnings growth (compared to sector or index)
- Attractive valuation ratios (e.g., low Price/Earnings-to-Growth (PEG), below-average P/E vs. peers)
- Solid fundamentals (strong balance sheet, positive free cash flow)
- EUR-denominated financials or primary listing on a European exchange (Euronext, Xetra, Borsa Italiana, etc.)
Why it matters: Growth stocks can be overhyped and expensive. Focusing on valuation helps avoid “growth traps”—stocks priced for perfection with little margin for error.
What can go wrong: Using US-based screening criteria (e.g., S&P 500 averages) can distort your analysis. European markets have different sector mixes, growth rates, and valuation norms.
Pro Tip
Compare growth rates and valuations to sector peers within Europe. A French tech stock’s “low” P/E might still be high for a German industrial.
Step 2: Choose the Right (European-Friendly) Screening Tools
What to do: Select a stock screener with comprehensive European coverage and EUR-based company data. Recommended platforms:
- MarketScreener (free and paid tiers)
- JustETF (ETF focus, but useful for sector/region ideas)
- Morningstar (subscription for advanced filters)
- Brokers like DEGIRO or Trade Republic for watchlists and basic screeners
Why it matters: Many popular US-based platforms (Yahoo Finance, Finviz) lack full European coverage or show only USD figures, leading to conversion headaches and missing data.
What can go wrong: Relying on a screener that omits smaller or mid-cap European stocks means you’ll miss many potential value-growth opportunities.
Pro Tip
Check if your broker offers direct screening tools. For example, in DEGIRO: “Products” → “Shares” → Filter by “Country” and “Exchange”. This ensures you’re seeing EUR listings and local data.
Step 3: Set Up Your Growth and Value Screening Criteria
What to do: In your chosen screener, set filters for both growth and value metrics. For 2026, consider:
- Revenue growth (last 3Y average): >10% per year
- EPS growth (forward estimate): >12% per year
- PEG ratio: <1.5 (the lower, the better for value)
- P/E ratio: Below sector median
- Debt/Equity: <1.0 (to avoid overleveraged firms)
- Market cap: €500 million to €20 billion (to avoid illiquidity but not just large caps)
- Exchange: Xetra, Euronext, Borsa Italiana, SIX Swiss, etc.
Example on MarketScreener:
- Go to “Stock Screener” → “Region” → Select “Europe”
- “Currency” → EUR
- Set “Revenue Growth 3Y” > 10%
- Set “Forward P/E” < sector median
- Set “PEG Ratio” < 1.5
- Set “Debt/Equity” < 1.0
Why it matters: Combining growth and value filters narrows the universe to companies with strong fundamentals yet reasonable prices.
What can go wrong: Too many filters may eliminate all candidates, especially in slower-growth sectors. Adjust thresholds if you get zero results.
Pro Tip
Save your screener settings for monthly reuse. Market conditions shift quickly—what’s undervalued today may not be next quarter.
Step 4: Shortlist and Compare Candidates
What to do: Review your filtered list. For each candidate, check:
- Financial statements (strong cash flow, manageable debt)
- Growth consistency (not just one-off spikes)
- Valuation relative to sector and past averages
- Recent news (avoid hidden risks or regulatory issues)
- Dividend policy (optional, but beware of “dividend traps”—see Dividend Trap Dangers: How to Spot Overvalued High-Yield European Stocks in 2026)
Why it matters: Screening is only the first filter. Manual review catches outliers and companies with misleading numbers (e.g., one-off gains).
What can go wrong: Blindly trusting screener data—always check the latest annual/interim reports (usually available on the company’s investor relations site).
Pro Tip
Use the “compare” feature in MarketScreener or Morningstar to see multiple candidates side by side for quick ratio and growth checks.
Step 5: Deep Dive—Two Practical Examples
Let’s walk through two hypothetical (but realistic) examples using EUR-based data and real European stocks:
Example 1: Nagarro SE (XETRA: NA9)
- Sector: IT Services
- 3Y Revenue Growth: 21% CAGR
- Forward P/E: 17
- PEG Ratio: 1.1
- Debt/Equity: 0.3
- Market Cap: ~€1.5 billion
Process: In MarketScreener, filter by “Technology,” “Revenue Growth 3Y > 10%,” “P/E < 20,” and “PEG < 1.5.” Nagarro appears. Reviewing their investor relations page, you confirm strong organic growth, consistent profitability, and a reasonable valuation versus peers like Atos or Capgemini. No major red flags in recent news.
Expected outcome: Nagarro makes your shortlist as an undervalued European growth stock for further due diligence.
Example 2: Reply S.p.A. (Borsa Italiana: REY)
- Sector: IT Consulting
- 3Y Revenue Growth: 14% CAGR
- Forward P/E: 22 (sector median: 28)
- PEG Ratio: 1.3
- Debt/Equity: 0.1
- Market Cap: ~€5.2 billion
Process: In MarketScreener, filter for “Italy,” “Technology,” “Revenue Growth 3Y > 10%,” “PEG < 1.5.” Reply appears. Their reports show strong client retention and expansion in digital services. Valuation is below sector average, with low debt.
Expected outcome: Reply is added to your watchlist for potential investment after a full qualitative review.
Step 6: Validate Data and Monitor Regularly
What to do: Cross-check screener numbers with:
- Company investor relations websites (for annual/interim reports in EUR)
- Official filings on exchange websites (e.g., Euronext, Xetra)
- News aggregators (to catch recent developments)
Set up alerts in your broker or screener for major price swings, earnings releases, or news. In Trade Republic: tap “Portfolio” → “Stocks” → “Set Price Alert”.
Why it matters: Numbers can change fast—especially for growth companies. Regular monitoring helps you react to both opportunities and risks.
What can go wrong: Out-of-date data can lead to buying into a “growth” stock that’s recently issued a profit warning or guidance cut.
Pro Tip
Keep a spreadsheet of your watchlist with key metrics and update it after each quarterly report. This builds your own database and sharpens your valuation instincts.
Common Mistakes
- Chasing high growth without checking valuation: A company growing at 20% but trading at 70x earnings is rarely “undervalued.”
- Ignoring sector/market context: Some sectors (e.g., utilities) rarely show high growth—don’t expect tech-like metrics everywhere.
- Relying only on screeners: Always read at least the latest annual report and management commentary before investing.
- Falling for “value traps”: A low P/E or PEG with declining revenue is a warning sign. For more, see Value Traps: How to Avoid Them When Investing in European Equities.
Next Steps
- Expand your criteria to include qualitative factors (management quality, competitive advantages)
- Consider building a diversified basket of 5–10 undervalued European growth stocks to spread risk
- For a broader framework, revisit our Complete Beginner’s Guide to Value Investing for Europeans in 2026
- Practice screening monthly to spot new opportunities as markets change
Disclaimer: This article is for educational purposes only and does not constitute financial advice. Always do your own research and consider consulting a qualified financial advisor before making investment decisions.