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A Trio of Stocks With Low Forward Price-Earnings Ratios

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- By Alberto Abaterusso

One strategy to unearth potential value opportunities is to look at stocks with an attractive forward price-earnings ratio.

Thus, investors may want to have a look at the following three stocks, as they have a forward price-earnings ratio standing below the S&P 500's historical average of 15. Estimates of future earnings are based on data from Morningstar analysts.


Vale SA

The first stock that qualifies is Vale SA (NYSE:VALE), a Brazilian producer and global seller of iron ore and iron ore pellets to steel companies.

Vale SA has a forward price-earnings ratio of 7.51 (versus the industry median of 17.07), which results from Friday's closing price of $11.08 per American Depository Receipt (ADR) and analyst expectations for net earnings of $1.475 per ADR for the next full fiscal year.

The stock price has risen 7.78% over the past year for a market capitalization of $56.84 billion and a 52-week range of $6.49 to $13.67.

A Trio of Stocks With Low Forward Price-Earnings Ratios
A Trio of Stocks With Low Forward Price-Earnings Ratios

GuruFocus has assigned a positive rating of 5 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 buy rating with an average price target of $14.67 per ADR of Vale SA.

Micron Technology Inc

The second company that holds the above listed criteria is Micron Technology Inc (NASDAQ:MU), a Boise, Idaho-based semiconductor company.

Micron Technology Inc has a forward price-earnings ratio of 8.45 (versus the industry median of 24.27), which is the result of Friday's closing price of $42.66 per share and analyst expectations for EPS of about $5.05 for the next full fiscal year.

The stock price has fallen nearly 2% over the past year for a market capitalization of $47.40 billion and a 52-week range of $31.13 to $61.19.

A Trio of Stocks With Low Forward Price-Earnings Ratios
A Trio of Stocks With Low Forward Price-Earnings Ratios

GuruFocus assigned a very good rating of 7 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 an overweight recommendation rating with an average target price of $64.19 per share of Micron Technology Inc.

General Motors Co

The third company that makes the cut is General Motors Co (NYSE:GM), a Detroit-based automaker.

General Motors Co has a forward price-earnings ratio of 14.03 (versus the industry median of 19.31), which derives from Friday's closing price of $28.56 per share and analysts' expectations for EPS of approximately $2.04 for the next full fiscal year.

The stock price has declined by 21.21% over the past year for a market capitalization of $40.87 billion and a 52-week range of $14.33 to $39.78.

A Trio of Stocks With Low Forward Price-Earnings Ratios
A Trio of Stocks With Low Forward Price-Earnings Ratios

GuruFocus has assigned a moderate rating of 4 out of 10 for the company's financial strength and a positive rating of 6 out of 10 for its profitability.

Wall Street sell-side analysts recommend a buy rating and have established an average target price of $39.19 per share of General Motors Co.

Disclosure: I have no positions in any securities mentioned.

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This article first appeared on GuruFocus.