To increase the likelihood to uncover value opportunities, investors may want to consider stocks with a favorable forward price-earnings ratio. The following stocks have a forward price-earnings ratio (based on Morningstar analysts' earnings estimates) that is lower than the S&P 500 index's historical average of 15.
NextGen Healthcare Inc
The first company under consideration is NextGen Healthcare Inc NXGN, an Irvine, California-based provider of healthcare software and services solutions to clinics in the U.S.
NextGen Healthcare has a forward price-earnings ratio of 13.4 (versus the industry median of 25.19), which results from Friday’s share price of $9.78 and analyst expectations of EPS of 73 cents for the next full fiscal year.
The stock price has decreased 49.4% in the past year for a market cap of $642.56 million and a 52-week range of $5.10 to $21.12.
GuruFocus has assigned a good rating of 7 out of 10 to the company’s financial strength and a positive rating of 6 out of 10 to its profitability.
The stock has a hold recommendation rating on Wall Street and an average target price of $11.46.
Perrigo Co PLC
The second company to consider is Perrigo Co PLC PRGO, an Irish manufacturer and supplier of over-the-counter health and wellbeing solutions in the U.S. and internationally.
Perrigo Co has a forward price-earnings ratio of 13.74 (versus the industry median of 18.69), which is the result of a share price of $54.28 as of May 22 and analyst expectations of $3.95 in EPS for the next full fiscal year.
The share price rose by 14.6% in the past year. The stock has a market capitalization of $7.4 billion and a 52-week range of $40.10 to $63.86.
GuruFocus has assigned a moderate rating of 4 out of 10 to the company’s financial strength and a positive rating of 6 out of 10 to its profitability.
The stock has an overweight recommendation rating on Wall Street and an average target price of $57.56.
Flex Ltd
The third company to consider is Flex Ltd FLEX, a Singapore-based provider of design, manufacturing and supply chain services to original equipment manufacturers worldwide.
Flex has a forward price-earnings ratio of 8.66 (versus the industry median of 16.25), which is the result of a share price of $9.61 as of May 22 and analyst expectations of EPS of $1.11 for the next full fiscal year.
The stock price has risen by almost 4% in the past year for a market cap of $4.84 billion and a 52-week range of $5.36 to $14.
GuruFocus has assigned a positive rating of 6 out of 10 to both the company’s financial strength and its profitability.
The stock has an overweight recommendation rating on Wall Street and an average target price of $12.69 per share.
Disclosure: I have no positions in any securities mentioned in this article.
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