Tuesday , 20 November 2018


Here Are 10 Low PE Stock Picks For The Defensive Investor

[This article identifies]…the 10 lowest PEmg (price/normalized earnings) companies reviewed by ModernGraham. Each company has been determined to be undervalued or fairly valued and suitable for the Defensive Investor according to the ModernGraham approach.

The original article has been edited here for length (…) and clarity ([ ]).

…Defensive Investors are defined as investors who are not able or willing to do substantial research into individual investments, and therefore need to select only the companies that present the least amount of risk.

1. Unum Group (UNM)

…The company appears to be Undervalued after growing its EPSmg (normalized earnings) from $2.31 in 2014 to an estimated $4.21 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 1.44% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into Unum Group revealed that the company:

  • was trading below its Graham Number of $69.92,
  • pays a dividend of $0.86 per share, for a yield of 1.8% and its
  • PEmg (price over earnings per share – ModernGraham) was 11.39, which was below the industry average of 22.6, which by some methods of valuation makes it one of the most undervalued stocks in its industry. (See the full valuation)

2. Newell Brands Inc (NWL)

…The company appears to be Undervalued after growing its EPSmg (normalized earnings) from $1.28 in 2014 to an estimated $2.89 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 0.48% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into Newell Brands Inc revealed that the company:

  • was trading below its Graham Number of $41.25,
  • pays a dividend of $0.88 per share, for a yield of 3.2%, putting it among the best dividend paying stocks today and
  • its PEmg (price over earnings per share – ModernGraham) was 9.46, which was below the industry average of 20.37, which by some methods of valuation makes it one of the most undervalued stocks in its industry.
  • Finally, the company was trading above its Net Current Asset Value (NCAV) of $-26.44.(See the full valuation)

3. Principal Financial Group Inc (PFG)

…The company appears to be Undervalued after growing its EPSmg (normalized earnings) from $2.9 in 2014 to an estimated $5.62 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 1.21% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into Principal Financial Group Inc revealed that the company:

  • was trading below its Graham Number of $74.18,
  • pays a dividend of $1.87 per share, for a yield of 3%, putting it among the best dividend paying stocks today and
  • its PEmg (price over earnings per share – ModernGraham) was 10.92, which was below the industry average of 20.16, which by some methods of valuation makes it one of the most undervalued stocks in its industry. (See the full valuation)

4. AT&T Inc. (T)

…The company appears to be Undervalued after growing its EPSmg (normalized earnings) from $1.89 in 2014 to an estimated $3.17 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 1.36% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.

At the time of valuation further research into AT&T Inc. revealed that the company:

  • was trading below its Graham Number of $41.02,
  • pays a dividend of $1.97 per share, for a yield of 5.5%, putting it among the best dividend paying stocks today and
  • its PEmg (price over earnings per share – ModernGraham) was 11.23, which was below the industry average of 41.47, which by some methods of valuation makes it one of the most undervalued stocks in its industry.
  • Finally, the company was trading above its Net Current Asset Value (NCAV) of $-36.26.(See the full valuation)

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5. Invesco Ltd. (IVZ)

…The company appears to be Undervalued after growing its EPSmg (normalized earnings) from $1.89 in 2014 to an estimated $2.63 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 1.87% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into Invesco Ltd. revealed that the company:

  • was trading below its Graham Number of $38.6,
  • pays a dividend of $1.15 per share, for a yield of 3.6%, putting it among the best dividend paying stocks today and
  • its PEmg (price over earnings per share – ModernGraham) was 12.24, which was below the industry average of 21.55, which by some methods of valuation makes it one of the most undervalued stocks in its industry.
  • Finally, the company was trading above its Net Current Asset Value (NCAV) of $-14.2.(See the full valuation)

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6. Verizon Communications Inc. (VZ)

…The company appears to be Undervalued after growing its EPSmg (normalized earnings) from $2.11 in 2014 to an estimated $4.58 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 1.11% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into Verizon Communications Inc. revealed that the company:

  • was trading above its Graham Number of $29.66,
  • pays a dividend of $2.34 per share, for a yield of 4.8%, putting it among the best dividend paying stocks today,
  • its PEmg (price over earnings per share – ModernGraham) was 10.71, which was below the industry average of 37.96, which by some methods of valuation makes it one of the most undervalued stocks in its industry.
  • Finally, the company was trading above its Net Current Asset Value (NCAV) of $-45.(See the full valuation)

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7. AFLAC Incorporated (AFL)

…The company appears to be Undervalued after growing its EPSmg (normalized earnings) from $6.07 in 2014 to an estimated $8.08 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 1.21% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into AFLAC Incorporated revealed that the company:

  • was trading below its Graham Number of $103.31,
  • pays a dividend of $1.74 per share, for a yield of 2% and
  • its PEmg (price over earnings per share – ModernGraham) was 10.92, which was below the industry average of 22.76, which by some methods of valuation makes it one of the most undervalued stocks in its industry. (See the full valuation)

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8. Molson Coors Brewing Co Class B (TAP)

…The company appears to be Undervalued after growing its EPSmg (normalized earnings) from $2.97 in 2014 to an estimated $5.76 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 2.78% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into Molson Coors Brewing Co revealed that the company:

  • was trading below its Graham Number of $83.53,
  • pays a dividend of $1.64 per share, for a yield of 2%, and
  • its PEmg (price over earnings per share – ModernGraham) was 14.06, which was below the industry average of 25.91, which by some methods of valuation makes it one of the most undervalued stocks in its industry.
  • Finally, the company was trading above its Net Current Asset Value (NCAV) of $-68.5. (See the full valuation)

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9. Torchmark Corporation (TMK)

…The company appears to be Undervalued after growing its EPSmg (normalized earnings) from $3.68 in 2014 to an estimated $6.98 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 1.81% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into Torchmark Corporation revealed that the company:

  • was trading below its Graham Number of $85.68,
  • pays a dividend of $0.6 per share, for a yield of 0.7% and
  • its PEmg (price over earnings per share – ModernGraham) was 12.12, which was below the industry average of 30.02, which by some methods of valuation makes it one of the most undervalued stocks in its industry. (See the full valuation)

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10. Discover Financial Services (DFS)

…The company appears to be Undervalued after growing its EPSmg (normalized earnings) from $4.47 in 2014 to an estimated $6.08 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 1.85% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into Discover Financial Services revealed that the company:

  • was trading above its Graham Number of $69.32,
  • pays a dividend of $1.3 per share, for a yield of 1.8% and
  • its PEmg (price over earnings per share – ModernGraham) was 12.2, which was below the industry average of 27.85, which by some methods of valuation makes it one of the most undervalued stocks in its industry. (See the full valuation)

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