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The following is a list of stocks that have lagged the rest of the market over the last quarter. In addition, all of these stocks have outperformed their competitors based on gross profit margins and net profit margins.

Considering their track record of profitability, is the market underestimating these names? What do you think? Full details below.

Profitability data sourced from Reuters, short float and performance data sourced from Finviz.

Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the top six stocks mentioned below. Analyst ratings sourced from Zacks Investment Research. Note: The numbers on top of items represent the forward P/E ratio, if available.


The list has been sorted by the five year average gross margin.

1. Visa, Inc. (NYSE:V): Business Services Industry. Market cap of $60.77B. The stock has lost -5.44% over the last quarter. 5-year average gross margin at 79.63% vs. industry average at 51.4%. 5-year average net profit margin at 19.87% vs. industry average at 15.92%. Short float at 3.28%, which implies a short ratio of 2.48 days. The stock has lost -16.12% over the last year.

2. Perusahaan Perseroan PT Telekomunikasi Indonesia Tbk. (NYSE:TLK): Telecom Services. Market cap of $16.54B. The stock has lost -18.05% over the last quarter. 5-year average gross margin at 78.58% vs. industry average at 53.98%. 5-year average net profit margin at 25.61% vs. industry average at 7.3%. Short float at 0.23%, which implies a short ratio of 1.5 days. The stock has lost -14.58% over the last year.

3. Mobile Telesystems OJSC (NYSE:MBT): Wireless Communications Industry. Market cap of $19.85B. The stock has lost -10.46% over the last quarter. 5-year average gross margin at 78.03% vs. industry average at 54.69%. 5-year average net profit margin at 17.83% vs. industry average at 13.14%. Short float at 0.22%, which implies a short ratio of 0.79 days. The stock has gained 0.68% over the last year.

4. GlaxoSmithKline plc (NYSE:GSK): Drug Manufacturers. Market cap of $101.36B. The stock has lost -5.56% over the last quarter. 5-year average gross margin at 76.62% vs. industry average at 48.49%. 5-year average net profit margin at 21.61% vs. industry average at 13.37%. Short float at 0.16%, which implies a short ratio of 1.92 days. The stock has lost -1.34% over the last year.

5. Alcon Inc. (NYSE:ACL):
Medical Instruments & Supplies Industry. Market cap of $49.58B. The stock has lost -4.35% over the last quarter. 5-year average gross margin at 75.49% vs. industry average at 50.41%. 5-year average net profit margin at 28.63% vs. industry average at 10.22%. Short float at 1.85%, which implies a short ratio of 1.12 days. The stock has gained 8.71% over the last year.

6. Novartis AG (NYSE:NVS): Drug Manufacturer. Market cap of $132.09B. The stock has lost -2.96% over the last quarter. 5-year average gross margin at 72.55% vs. industry average at 48.49%. 5-year average net profit margin at 18.73% vs. industry average at 13.37%. Short float at 1.34%, which implies a short ratio of 6.13 days. The stock has gained 12.85% over the last year.

7. British American Tobacco plc (NYSEMKT:BTI): Cigarettes Industry. Market cap of $76.11B. The stock has lost -1.42% over the last quarter. 5-year average gross margin at 71.73% vs. industry average at 45.2%. 5-year average net profit margin at 21.37% vs. industry average at 14.51%. Short float at 0.01%, which implies a short ratio of 0.59 days. The stock has gained 21.97% over the last year.

8. Johnson & Johnson (NYSE:JNJ): Drug Manufacturer. Market cap of $171.64B. The stock has lost -.86% over the last quarter. 5-year average gross margin at 71.17% vs. industry average at 48.49%. 5-year average net profit margin at 19.58% vs. industry average at 13.37%. Short float at 0.98%, which implies a short ratio of 2.65 days. The stock has lost -0.41% over the last year.

9. Telefonica, S.A. (NYSE:TEF): Telecom Services. Market cap of $104.45B. The stock has lost -11.95% over the last quarter. 5-year average gross margin at 69.75% vs. industry average at 53.98%. 5-year average net profit margin at 13.22% vs. industry average at 7.3%. Short float at 0.67%, which implies a short ratio of 1.21 days. The stock has lost -7.85% over the last year.

10. Bristol-Myers Squibb Company (NYSE:BMY): Drug Manufacturer. Market cap of $44.42B. The stock has lost -3.89% over the last quarter. 5-year average gross margin at 69.49% vs. industry average at 48.49%. 5-year average net profit margin at 17.53% vs. industry average at 13.37%. Short float at 2.26%, which implies a short ratio of 4.12 days. The stock has gained 9.03% over the last year.

11. TransCanada Corp. (NYSE:TRP):
Gas Utilities Industry. Market cap of $26.15B. The stock has lost -.84% over the last quarter. 5-year average gross margin at 65.93% vs. industry average at 39.49%. 5-year average net profit margin at 16.95% vs. industry average at 13.86%. Short float at 0.22%, which implies a short ratio of 4.18 days. The stock has gained 15.56% over the last year.

12. Cisco Systems, Inc. (NASDAQ:CSCO): Networking & Communication Devices Industry. Market cap of $117.06B. The stock has lost -8.89% over the last quarter. 5-year average gross margin at 64.26% vs. industry average at 31.53%. 5-year average net profit margin at 19.47% vs. industry average at 5.52%. Short float at 0.75%, which implies a short ratio of 0.57 days. The stock has lost -14.29% over the last year.

13. Reed Elsevier plc (NYSE:RUK):
Publishing Industry. Market cap of $10.38B. The stock has lost -4.15% over the last quarter. 5-year average gross margin at 64% vs. industry average at 44.81%. 5-year average net profit margin at 11.06% vs. industry average at 9.58%. Short float at 0.02%, which implies a short ratio of 1.44 days. The stock has gained 8.1% over the last year.

14. Millicom International Cellular SA (MICC):
Telecom Services. Market cap of $10.48B. The stock has lost -3.61% over the last quarter. 5-year average gross margin at 63.57% vs. industry average at 54.69%. 5-year average net profit margin at 14.78% vs. industry average at 13.14%. Short float at 1.53%, which implies a short ratio of 2.25 days. The stock has gained 19.3% over the last year.

15. Discovery Communications, Inc. (NASDAQ:DISCA): CATV Systems Industry. Market cap of $11.28B. The stock has lost -9.76% over the last quarter. 5-year average gross margin at 61.32% vs. industry average at 54.33%. 5-year average net profit margin at 14.5% vs. industry average at 4.96%. Short float at 6.79%, which implies a short ratio of 10.44 days. The stock has gained 23.98% over the last year.

16. Portugal Telecom SGPS SA (NYSE:PT): Wireless Communications Industry. Market cap of $9.65B. The stock has lost -22.18% over the last quarter. 5-year average gross margin at 59.67% vs. industry average at 53.98%. 5-year average net profit margin at 11.91% vs. industry average at 7.3%. Short float at 0.09%, which implies a short ratio of 2.96 days. The stock has lost -9.52% over the last year.

17. France Telecom (FTE): Telecom Services. Market cap of $55.37B. The stock has lost -7.15% over the last quarter. 5-year average gross margin at 58.02% vs. industry average at 53.98%. 5-year average net profit margin at 8.86% vs. industry average at 7.3%. Short float at 0.04%, which implies a short ratio of 0.95 days. The stock has lost -9.24% over the last year.

18. Abbott Laboratories (NYSE:ABT): Drug Manufacturer. Market cap of $73.55B. The stock has lost -9.7% over the last quarter. 5-year average gross margin at 55.96% vs. industry average at 48.49%. 5-year average net profit margin at 14.56% vs. industry average at 13.37%. Short float at 0.55%, which implies a short ratio of 1 days. The stock has lost -10.87% over the last year.

19. Telecom Italia SpA (NYSE:TI): Diversified Communication Services Industry. Market cap of $26.02B. The stock has lost -7.78% over the last quarter. 5-year average gross margin at 55.6% vs. industry average at 53.98%. 5-year average net profit margin at 8.77% vs. industry average at 7.3%. Short float at 0.03%, which implies a short ratio of 0.79 days. The stock has lost -5.85% over the last year.

20. AT&T, Inc. (NYSE:T):
Telecom Services. Market cap of $165.72B. The stock has lost -0.07% over the last quarter. 5-year average gross margin at 54.11% vs. industry average at 53.98%. 5-year average net profit margin at 10.59% vs. industry average at 7.3%. Short float at 0.83%, which implies a short ratio of 2.1 days. The stock has gained 12.03% over the last year.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Source: 20 Underperforming Stocks With a Track Record of Profitability