The forward P/E ratio is a price-multiple valuation that slightly differs from the standard P/E ratio. The difference is that it uses forecasted earnings in the equation. While this may not be as reliable as current earnings information, it does provide insight into the future earnings expectations of analysts who cover the firm.
Return on equity (ROE) helps investors to potentially indentify competitively advantageous companies. This ratio illustrates the actual return on shareholders' equity and break down the firm into several components. When looking at the individual components of ROE, this ratio makes it easier to see which parts of the firm are potentially underperforming or overly reliant upon.
We ran a screen for mid cap stocks with a forward P/E of less than 10. From this narrowed pool, we then screened for firms that have a return on equity (TTM) of at least 20% or higher.
The forward P/E ranks the firms highest to lowest:
1. Cooper Industries PLC. (CBE)
Sector | Industrials |
Industry | Diversified Industrials |
Market Cap | $7,373M |
Beta | 1.57 |
The company manufactures electrical products and tools worldwide. The firm has a forward P/E of 9.99. CBE’s ROE 23.47%. The short interest was 0.70% as of 08/15/2011.
2. Cosan Ltd (CZZ)
Sector | Consumer Defensive |
Industry | Farm Products |
Market Cap | $3,064M |
Beta | 2.09 |
The company produces ethanol and sugar in Brazil. The firm has a forward P/E of 9.97. CZZ’s ROE is 45.94%. The short interest was N/A as of 08/15/2011.
3. Darden Restaurants Inc (DRI)
Sector | Consumer Cyclical |
Industry | Restaurants |
Market Cap | $5,839M |
Beta | 0.88 |
The company operates a chain of restaurants that include Red Lobster, Olive Garden, and more. The firm has a forward P/E of 9.90. DRI’s ROE is 24.87%. The short interest was 5.10% as of 08/15/2011.
4. Herman Miller, Inc. (MLHR)
Sector | Industrials |
Industry | Business Equipment |
Market Cap | 1,002M |
Beta | 1.26 |
The company design and manufactures interior furnishings. The firm has a forward P/E of 9.4. MLHR’s ROE is 9.87%. The short interest was N/A as of 08/15/2011.
5. Belden, Inc. (BDC)
Sector | Industrials |
Industry | Diversified Industrials |
Market Cap | $1,361M |
Beta | 2.01 |
The company produces specialty electronic and data network products. The firm has a forward P/E of 9.76. BDC’s ROE is 21.16%. The short interest was 5.20% as of 08/15/2011.
6. Pan American Silver Corporation (PAAS)
Sector | Basic Materials |
Industry | Silver |
Market Cap | $3,620M |
Beta | 1.38 |
The company develops and mines silver properties. The firm has a forward P/E of 9.69. PAAS’s ROE is 20.00%. The short interest was N/A as of 08/15/2011.
7. Albemarle Corp (ALB)
Sector | Basic Materials |
Industry | Specialty Chemicals |
Market Cap | $4,206M |
Beta | 1.58 |
The company offers specialty chemicals and more. The firm has a forward P/E of 9.66. ALB’s ROE is 27.32%. The short interest was 2.30% as of 08/15/2011.
8. Rockwood Holdings Inc (ROC)
Sector | Specialty Chemicals |
Industry | Basic Materials |
Market Cap | $3,464M |
Beta | 3.03 |
The company sells advanced specialty chemicals and materials for a variety of uses. The firm has a forward P/E of 9.63. ROC’s ROE is 38.18%. The short interest was 2.90% as of 08/15/2011.
9. CTC Media, Inc. (CTCM)
Sector | Broadcasting - TV |
Industry | Consumer Cyclical |
Market Cap | $2,147M |
Beta | 2.64 |
The company is a Russian television network. The firm has a forward P/E of 9.61. CTCM’s ROE is 20.29%. The short interest was N/A as of 08/15/2011.
10. American Capital Ltd (ACAS)
Sector | Financial Services |
Industry | Asset Management |
Market Cap | $2,873M |
Beta | 2.52 |
The company is a business development and alternative asset manager. The firm has a forward P/E of 9.55. ACAS’s ROE is 35.90%. The short interest was 2.90% as of 08/15/2011.
We hope this list helps investors as they do their own due diligence on mid cap companies.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
