To increase their chances of discovering value opportunities, investors should screen the market for stocks with a favorable forward price-earnings ratio.
The following stocks have a forward price-earnings ratio that stands lower than the S&P 500 Index's historical average of 15. The S&P 500 is one of the most used benchmarks for the U.S. market. Estimates of future earnings are produced based on data from Morningstar analysts.
Oracle
The first company to consider is Oracle Corp. (ORCL, Financial), a global computer technology giant based in the U.S.
Oracle has a forward price-earnings ratio of 13.75 (versus the industry median of 28.99), which results from Monday’s share price of $54.76 and analyst expectations for earnings per share of about $3.98 for the next full fiscal year.
The stock has fallen 5.6% over the past year for a market capitalization of $168.04 billion and a 52-week range of $39.71 to $60.5.
GuruFocus has assigned a moderate rating of 4 out of 10 for the company’s financial strength and a remarkably high rating of 9 out of 10 for its profitability.
Wall Street sell-side analysts recommend a hold rating for Oracle.
Gilead Sciences
The second company to consider is Gilead Sciences Inc. (GILD, Financial), a Foster City, California-based pharmaceutical drug manufacturer.
Gilead Sciences has a forward price-earnings ratio of 12.1 (versus the industry median of 19.48), which is the result of Monday’s closing share price of $74.56 and analyst expectations for earnings of about $6.16 for the next full fiscal year.
The stock has risen 10% over the past year for a market capitalization of $93.53 billion and a 52-week range of $60.89 to $85.97.
GuruFocus assigned a positive rating of 5 out of 10 to the company’s financial strength and a high rating of 8 out of 10 to its profitability.
Wall Street sell-side analysts issued a hold recommendation rating for Gilead Sciences.
GlaxoSmithKline
The third company to consider is GlaxoSmithKline PLC (GSK, Financial), a British pharmaceutical giant.
GlaxoSmithKline has a forward price-earnings ratio of 13.85 (versus the industry median of 19.48), which is the result of Monday’s closing share price of $40.75 and analysts' earnings expectations of about $2.94 for the next full fiscal year.
The stock is almost flat after a year of trading for a market capitalization of $102.23 billion and a 52-week range of $31.43 to $48.25.
GuruFocus has assigned a moderate rating of 4 out of 10 for the company’s financial strength and a high rating of 8 out of 10 for its profitability.
Wall Street sell-side analysts recommend a hold rating for GlaxoSmithKline.
Disclosure: I have no positions in any securities mentioned in this article.
Read more here:
- A Trio of Stocks With Low Price-Sales Ratios
- 3 Stocks Growing Capex Fast
- A Trio of Small Caps Growing Earnings Fast
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