If a company is not meeting its pension obligations, it's probably not going to live up to shareholder expectations either.
Morgan Stanley equity strategists created a list of 50 companies with the largest pension-fund shortfalls. "Our analysis shows that companies with pensions underfunded by >5% of market cap significantly underperform the broader equity universe and sector peers," they concluded.
The strategists estimate pension benefit obligations will rise 6% year-over-year when companies have to square up at year end.
The coronavirus shutdowns had sent stock values into a nosedive, wreaking havoc on pension plans, but a swift market recovery has eased some of the pain. Pension funding has also suffered from a decline in interest rates during the pandemic.