Capital Group study reveals global companies have now earned back their US$35 trillion 2014 market value

Katharine Dryer

Global companies have now generated enough profit to exceed their entire stock market value from the start of 2014, showing that strong earnings growth has repeatedly justified rising equity valuations over the past decade^[1], according to Value Watch – part of the Capital Group Global Equity Study^[2].

The Equity Study assesses global companies’ market value^[3] by how long it takes for companies to earn back their value in actual profits, addressing a central question for investors today: are current valuations supported by the profits companies are likely to deliver?

The world’s 1,600^[4] largest listed companies were collectively worth US$35.3 trillion at the start of 2014. Between 2014 and 2025, they generated US$36.7 trillion in cumulative profits, effectively earning back their entire 2014 market value in under twelve years.

At the beginning of 2014, global equities traded on a price-to-earnings ratio of 15.9 times. On a static basis, investors would have expected to wait until 2029, almost sixteen years, for cumulative profits to match the starting valuation. Instead, strong earnings growth shortened that period by around four years. Companies generated profits more quickly than implied by their starting valuations.

The same pattern can be seen over other periods. It took 13 years for companies to earn back their US$24.9 trillion 2010 valuation. More recently, companies have already earned back 45% of their US$54.7 trillion 2020 pre-pandemic value, suggesting the 12-13 year payback mark is on track to be repeated. Moreover, one in seven companies have already earned back their entire 2020 valuation.

Katharine Dryer, Equity Asset Class Lead, Europe and Asia at Capital Group, said: “A company’s valuation depends not only on the multiple investors pay, but also on whether future profit growth can justify it. Over the past decade, strong earnings growth has repeatedly supported higher market valuations. Today, global equities are valued at US$113.8 trillion, or around 21 times expected 2026 profits, raising the hurdle for investors. Starting from higher valuations, growth must do more of the work — but companies that deliver can still justify demanding multiples.

“For active investors like Capital Group, it is not about avoiding higher valuations, instead, our portfolio managers and analysts are focused on where growth is durable and still being underestimated. In a market where outcomes become more sensitive to earnings delivery, active management can add value by identifying between companies that meet earnings expectations and those that fall short. Active managers play a critical role in price discovery, valuation discipline and the provision of long-term capital across market cycles. That role is essential to healthy public markets — for investors, issuers and all market participants.”

Geographical divergence

Geographical differences mainly reflect the sector mix, though country-specific dynamics are relevant too.

US companies earned back their 2014 market value in 12 years – despite a high starting valuation led by strong profit growth.

In Europe, recent recovery for energy and financial companies enabled the region to catch up after slow growth in the 2010s, with payback achieved over the 13 years since 2013.

The Australian market is dominated by cyclical industries – especially banking and mining. One fifth of Australian companies in Capital Group’s index^[4] have not yet made profits equal to their 2010 market value, which has held back the average. Australian companies earned back their 2012 market value of $US786 billion in 14 years. High profits during the commodity boom of 2021-2022 enabled Australian mining companies to achieve more rapid payback than the wider market and while the cycle turned against them in 2023 and 2024, it is now looking more favourable again. By the end of April 2026, combined market value of Australian companies had risen to US$1.4 trillion.

Read the report. 

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Notes:
[1] Figures are in nominal US dollars; however, adjusting for inflation adds just one year to the ‘real’ payback period.
[2] The Capital Group Global Equity Study is a comprehensive exploration of the world’s major equity markets, examining how companies generate, grow, and return value to shareholders. The Value Watch is published annually and this first edition looks at why companies are worth what they are, showing the connection between company profitability, profit growth, and market capitalisation. It looks at the world’s largest 1,600 companies and calculates the Equity Payback Period – how long it has taken for a company to ‘earn back’ its market value in profits. It shows how this differs from one sector to another and across different regions of the world. And it reveals how many expensive companies are often expensive for a reason, while investors may have to wait a long time for many apparently cheap companies to complete their Equity Payback Period.
[3] The Value Watch looks at how long it actually takes for companies to earn back their value in realised profits. We call this the ‘Equity Payback Period’. Unlike the traditional price-to-earnings (P/E) ratio which reflects expectations about future earnings, this measure looks backward, focusing on the profits companies truly generated in the years that followed. This is not a portfolio construction tool or a description of how Capital Group investors value individual companies. It is a simple, retrospective way to illustrate the relationship between market value, profits, growth expectations and valuation discipline. By focusing instead on realised outcomes, the Equity Payback Period can provide a more grounded way to assess how valuation expectations have translated into reality.
[4] An index of companies tracked by Capital Group in the Value Watch report.