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These Large-Cap Stocks Offer High Earnings Yields

- By Alberto Abaterusso

I sometimes screen for companies that are outperforming 20-year high-quality market corporate bonds in terms of a higher earnings yield. Such research increases the odds of uncovering a value stock. These bonds are securities representing the corporate loan issued by companies that are triple-A, double-A and single-A rated.


The most recent monthly observation on the spot rate of the 20-year bond is indicating a 4.77% yield. Therefore, my screener produced the following three stocks.

Toyota Motor Corp. (TM) has an earnings yield of 13.9%. Shares of the Japanese automotive manufacturer were trading around $121.99 on Monday. The market capitalization is $174.5 billion. The stock has declined 9% for the 52 weeks through Jan. 4. The current share price falls near the midpoint of the 52-week range of $111.12 to $140.99. The stock has a price-book ratio of 0.96 versus an industry median of 1.45 and a price-sales ratio of 0.63 versus an industry median of 0.68.

According to the Peter Lynch chart, the stock is trading cheaply.

Toyota Motor has a recommendation rating of 1 out of 5 and an average target price of $147.3 per share.

The company has a GuruFocus financial strength rating of 6 out of 10 and profitability and growth rating of 7 out of 10.

Naspers Ltd. (NPSNY), a global provider of internet and entertainment services, was trading around $41.14 on Monday for a market capitalization of $86.18 billion. The stock has an earnings yield of 10.9%. The share price is down 30% for the 52 weeks through Jan. 4. The price-book ratio is 4.09 versus an industry median of 3.85 and the price-sales ratio is 15.69 versus an industry median of 2.6. The share price falls at the lower end of the 52-week range of $32.31 to $62.90.

The Peter Lynch chart shows the stock is trading near its fair value.

GuruFocus has assigned a financial strength rating of 7 out of 10 and a profitability and growth rating of 7 out of 10.

China Petroleum & Chemical Corp. (SNP) was trading around $73.2 on Monday with a market capitalization of roughly $89.85 billion. The Chinese producer of crude oil and natural gas has an earnings yield of 11.5%. For the 52 weeks through Jan. 4, the share price declined 9%. The 52-week range is $69.02 to $105.61, the price-book ratio is 0.87, the price-sales ratio is 0.23 and the EV-to-EBITDA ratio is 3.

The Peter Lynch chart suggests that the stock is cheap.

GuruFocus has assigned a financial strength rating of 7 out of 10 and a profitability and growth rating of 5 out of 10.

Disclosure: I have no positions in any securities mentioned in this article.

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This article first appeared on GuruFocus.