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By Roger Choudhury

We set out to find some of the most efficient stewards of shareholder equity still selling at reasonable multiples. So we screened for stocks with a return on equity of over 15% and price-to-earnings ratios of less than 20. Here what we found:

Lockheed Martin (NYSE:LMT) has a return on equity of 49.5% over the first 9 months of 2010. For the same period in 2009, ROE is 53.2%. For the entire FY 2009, ROE is 86.4%. Among Lockheed’s peers, ROE for Boeing (NYSE:BA) is 135.15% in FY 2010; for Honeywell (NYSE:HON), it is 20.73% in FY 2010; for General Dynamics (NYSE:GD), it is 20.39% in FY 2010. Lockheed is well above ROE average for the aerospace and defense sub-industry of 25.93%.

Taking into account interest expense (or not), the return on assets for the first 9 months of 2010 is 6.1% (5.4%), and for the same figure in 2009, it is 6.8% (6.2%). Without interest expense, ROA is 8.82% in FY 2009. In FY 2010, without interest expense, ROA for Boeing, Honeywell, and General Dynamics are 5.06%, 5.48%, and 8.25%.

For the trailing 12 months, the P/E ratio for Lockheed is 11.1, whereas for Boeing, Honeywell, and General Dynamics, it is 15.9, 21.7, and 11.2, respectively. The sub-industry average is 14.4.

Comparing the P/E to expected EPS growth rate (PEG ratio), for Lockheed, Boeing, Honeywell, and General Dynamics, it is 1.13, 1.73, 1.44, and 1.40, respectively. Lockheed is below the sub-industry average of 1.42.

For Lockheed, EPS is down from $5.61 to $5.23 or - 6.7%, when comparing the first 9 months of 2010 to 2009. In 2010, EPS grew by 141.85% for Boeing, dropped 9.12% for Honeywell, and increased 20.39% for General Dynamics.

For the first 9 months of 2010, Lockheed’s EBT and profit margins are 8.35% and 10.47%. In 2009, the EBT and profit margins are 9.58% and 11.48% for the same period. For Boeing, Honeywell, and General Dynamics, the respective figures are 7.01%, 8.52%, and 11.67% for the EBT margin, and 19.38%, 23.53%, and 18.20% for the profit margin. The average profit margin for the sub-industry is 6.01%.

Lockheed has consistently paid out quarterly dividends since 2001. The next ex-dividend date is Friday, February 25 for payment of $0.75 per share on March 25. The current yield is 3.7%. Lockheed was also one of 8 bluechips for an inflation-proof portfolio.

Newmont Mining (NYSE:NEM) has a ROE of 11.96% over the first 9 months of 2010, compared to 6.9% in the same period in 2009 and 14.57% in FY 2009. The peer group includes Goldcorp (NYSE:GG), Kinross Gold (NYSE:KGC), AngloGold Ashanti (NYSE:AU). For the first 9 months of 2010, Goldcorp’s ROE is 7.28%, and it was 1.58% for FY 2009. For FY 2010, Kinross Gold has a ROE of 5.75%, and AngloGold Ashanti earned a ROE of 3.76%. The gold sub-industry has an average ROE of 12%.

Taking into account interest expense, the ROA for the first 9 months of 2010 for NEM is 6.87%. The same item for the first 9 months in 2009 is 3.6% and 6.8% in FY 2009. Goldcorp has a ROA of 5.29% in the first 9 months of 2010. In FY 2009, it was only 1.2%. Kinross Gold and AngloGold Ashanti have ROAs of 4.70% and 1.35% in 2010, respectively.

PEG ratio for NEM, GG, and KGC are 1.5, 0.4, 2.5, respectively. 1.4 is the sub-industry’s average.

The P/Es for Neumont Mining, Goldcorp, Kinross Gold, and AngloGold Ashanti are respectively 14.26, 21.9, 25.4, and 208.1, for the trailing 12 months. The average P/E for the gold sub-industry is 14.

For Newmont Mining, EPS climbed 93.4% from $1.52 to $2.94 in the first 9 months of 2010 vs. first 9 months of 2009. Goldcorp’s EPS is up by 600% in the first 9 months of 2010 relative to the same period in 2009. Kinross Gold and AngloGold Ashanti show EPS changes of 111.3% and 122.4%, respectively.

40.8% of income remains before income taxes for Newmont Mining in the first 9 months of 2010. The same stat for the same period in 2009 is 33.7%. Also, the profit margin is 42.4% in the first 9 months of 2010, and 34.1% for the same 9 months in 2009. The EBT and profit margins for Goldcorp are 60% and 36.8%, respectively, in the first 9 months of 2010. In FY 2010, for Kinross Gold and AngloGold Ashanti, 38.5% and 7.3% are the respective EBT margins, and 40.1% and 19.6% are the respective profit margins. The average profit margin for the gold sub-industry is 13.76%.

Newmont Mining will announce Q4 2010 and FY 2010 earnings on Thursday, February 24. The current yield is 1% with the next ex-dividend date on March 11 and payment date on March 30. If you’re looking for some other mining names, we believe these two companies offer good value.

Exelon (NYSE:EXC) has a ROE of 19.56% in FY 2010. Southern Company (NYSE:SO) has a ROE of 11.39% in FY 2009, and 11.5% in the first 9 months of 2010. Duke Energy (NYSE:DUK) has a ROE of 5.03% in FY 2009, and 4% in the first 9 months of 2010. NextEra Energy (NYSE:NEE) has a ROE of 13.1% in FY 2009, and 11.97% in the first 9 months of 2010. The electric utilities industry has an average ROE of 12.53%.

The ROAs are as follows: Exelon – 19.56% in FY 2010; Southern Company – 3.4% for the first 9 months of 2010, and 3.27% in FY 2009; Duke Energy – 1.54% for the first 9 months of 2010, and 1.95% in FY 2009; NextEra Energy – 1% for the first 9 months of 2010, and 3.46% in FY 2009.

For SO, DUK, and NEE, the PEG ratios are 3.1, 3.9, and 2.0, respectively. The industry PEG is 3.

The P/Es for Exelon, Southern Company, Duke Energy, and NextEra Energy are respectively 10.7, 15.9, 17.9, and 11.5, for the trailing 12 months. The average P/E for the industry is 12.08.

In 2010, EPS fell by 5.38% for Exelon. In the first 9 months of 2010, EPS grew by 24.4% for Southern Company, increased by 21.4% for Duke Energy, and went up by 31.7% for NextEra Energy. The FY 2009 figures for the 4 respective companies are: -0.97%, -8.44%, -22.43%, and -2.46%.

The EBT and profit margins for Exelon are 22.64% and 65.48% for 2010. For Southern Company, the EBT and profit margins are 24.09% and 24.3%, for the first 9 months of 2010. In 2009, the same margins are 16.54% and 59.18%, respectively. For Duke Energy, the EBT and profit margins are 18.6% and 21.6%, for the first 9 months of 2010. In 2009, the respective margins are 14.38% and 65.09%. For NextEra Energy, the EBT and profit margins are 18.6% and 23.2%, respectively. In 2009, the same figures are 12.41% and 52.66%.

Exelon has paid $0.525 per share in dividends since Q4 2008. The current yield is 5%. Exelon was also one of our 10 dividend kings for 2011.

Kimberly-Clark (NYSE:KMB) has a ROE of 31.1% in 2010. In the first 9 months of 2010, Colgate-Palmolive (NYSE:CL) has a ROE of 59.09%. In 2009, its ROE is 97.74%. The household products industry average ROE is 25.67%.

ROA for KMB in 2010 is 9.27%. CL in the first 9 months of 2010 has a ROE of 13.86%, and 21.7% in 2009.

The PEG ratio for KMB and CL are 1.6 and 2.0, respectively. The industry average is 1.84.

The P/Es for KMB and CL are and 14.6 and 18.2 for the trailing 12 months. For the household products industry, the average P/E is 16.1.

EPS fell by 1.5% for KMB in 2010, but increased for CL by 17.1% in the first 9 months of 2010. In 2009, CL grew EPS by 19.4%.

In 2010, the EBT and profit margins for Kimberly-Clark are 12.9% and 33.17%. Colgate-Palmolive has an EBT margin of 21.9% and profit margin of 59.15% in the first 9 months of 2010. In 2009, the respective figures are 23.08% and 58.77%. The average profit margin for the household products industry is 13.48%.

KMB has paid dividends since 1935. The current yield on KMB is 4.3% with an ex-dividend date of March 2, and payment date of April 4. KMB also came up on our list of 8 blue chip stocks for an inflation proof portfolio.

Source: 4 Cheap Companies With Return on Equity Above 15%