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In the search for potentially undervalued stocks, we ran a screen based on the theoretical assumption that if P/E is equal to a constant K, growth in EPS estimates should be matched by proportionate growth in price. When they don’t match up, a mispricing may have occurred.

We ran a screen on dividend stocks from the 200 largest stocks by market cap for those exhibiting this mismatch between changes in EPS estimate and price.

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.‬

We also created a price-weighted index of the stocks mentioned below, and monitored the performance of the list relative to the S&P 500 index over the last month. To access a complete analysis of this list's recent performance, click here.


(Click to enlarge)

Do you think these stocks should be trading higher? Use this list as a starting-off point for your own analysis.

List sorted by dividend yield.

1. AstraZeneca PLC (AZN): Develops, and commercializes prescription medicines for cardiovascular, gastrointestinal, infection, neuroscience, oncology, and respiratory and inflammation diseases worldwide. Market cap of $59.17B. Dividend yield at 6.10%, payout ratio at 44.20%. Over the last 30 days, analyst projected EPS has increased 2.83% (from $7.06 to $7.26), while the price has decreased 4.0% (from $46.97 to $45.09). The stock has lost 10.46% over the last year.

2. Sun Life Financial Inc. (SLF): Provides various life and health insurance, savings, investment management, retirement, and pension products and services to individuals and corporate customers. Market cap of $14.70B. Dividend yield at 5.77%, payout ratio at 45.49%. Over the last 30 days, analyst projected EPS has increased 0.34% (from $2.94 to $2.95), while the price has decreased 4.23% (from $27.18 to $26.03). Might be undervalued at current levels, with a PEG ratio at 0.82, and P/FCF ratio at 3.12. The stock has lost 0.55% over the last year.

3. The Bank Of Nova Scotia (BNS): Offers various personal, commercial, corporate, and investment banking services in Canada and internationally. Market cap of $56.92B. Dividend yield at 4.06%, payout ratio at 44.40%. Over the last 30 days, analyst projected EPS has increased 3.91% (from $4.60 to $4.78), while the price has decreased 2.86% (from $55.21 to $53.63). The stock has gained 4.63% over the last year.

4. Unilever plc (UL): Provides fast-moving consumer goods in Asia, Africa, Europe, and the Americas. Market cap of $88.44B. Dividend yield at 3.96%, payout ratio at 38.77%. Over the last 30 days, analyst projected EPS has increased 2.62% (from $2.29 to $2.35), while the price has decreased 8.57% (from $34.30 to $31.36). The stock has gained 14.29% over the last year.

5. LM Ericsson Telephone Co. (ERIC): Provides communications equipment, professional services, and multimedia solutions to mobile and fixed networks operators worldwide. Market cap of $33.98B. Dividend yield at 3.55%, payout ratio at 43.87%. Over the last 30 days, analyst projected EPS has increased 2.17% (from $0.92 to $0.94), while the price has decreased 2.73% (from $10.99 to $10.69). The stock has lost 1.05% over the last year.

6. AFLAC Inc. (AFL): Provides supplemental health and life insurance. Market cap of $16.56B. Dividend yield at 3.39%, payout ratio at 30.74%. Over the last 30 days, analyst projected EPS has increased 0.32% (from $6.29 to $6.31), while the price has decreased 3.36% (from $37.48 to $36.22). Might be undervalued at current levels, with a PEG ratio at 0.77, and P/FCF ratio at 2.12. The stock has lost 32.26% over the last year.

7. BHP Billiton plc (BBL): Operates as a diversified natural resources company. Market cap of $163.17B. Dividend yield at 3.30%, payout ratio at 23.32%. Over the last 30 days, analyst projected EPS has increased 0.50% (from $6.01 to $6.04), while the price has decreased 4.93% (from $66.79 to $63.50). Might be undervalued at current levels, with a PEG ratio at 0.76, and P/FCF ratio at 13.13. The stock has gained 2.12% over the last year.

8. Emerson Electric Co. (EMR): Operates as a diversified manufacturing and technology company. Market cap of $33.84B. Dividend yield at 3.04%, payout ratio at 43.47%. Over the last 30 days, analyst projected EPS has increased 0.31% (from $3.23 to $3.24), while the price has decreased 0.24% (from $45.89 to $45.78). The stock has lost 10.78% over the last year.

9. BHP Billiton Ltd. (BHP): Industrial Metals & Minerals Industry. Market cap of $203.33B. Dividend yield at 2.64%, payout ratio at 23.32%. Over the last 30 days, analyst projected EPS has increased 13.49% (from $7.93 to $9.00), while the price has decreased 5.85% (from $83.49 to $78.61). The stock has gained 5.79% over the last year.

10. The Chubb Corporation (CB): Provides property and casualty insurance to businesses and individuals. Market cap of $17.12B. Dividend yield at 2.61%, payout ratio at 21.15%. Over the last 30 days, analyst projected EPS has increased 0.18% (from $5.69 to $5.70), while the price has decreased 2.30% (from $61.62 to $60.20). Might be undervalued at current levels, with a PEG ratio at 0.94, and P/FCF ratio at 10.11. The stock has gained 4.96% over the last year.

11. Nippon Telegraph & Telephone Corp. (NTT): Provides telecommunications services to residential and business customers in Japan. Market cap of $70.0B. Dividend yield at 2.56%, payout ratio at 31.33%. Over the last 30 days, analyst projected EPS has increased 18.44% (from $2.44 to $2.89), while the price has increased 1.34% (from $23.80 to $24.12). Might be undervalued at current levels, with a PEG ratio at 0.77, and P/FCF ratio at 8.07. The stock has gained 8.63% over the last year.

12. Exxon Mobil Corporation (XOM): Engages in the exploration and production of crude oil and natural gas, and manufacture of petroleum products, as well as transportation and sale of crude oil, natural gas, and petroleum products. Market cap of $358.34B. Dividend yield at 2.55%, payout ratio at 23.58%. Over the last 30 days, analyst projected EPS has increased 0.47% (from $8.57 to $8.61), while the price has decreased 0.36% (from $74.16 to $73.89). The stock has gained 22.63% over the last year.

13. ACE Limited (ACE): Provides a range of insurance and reinsurance products to insureds worldwide. Market cap of $21.09B. Dividend yield at 2.24%, payout ratio at 17.98%. Over the last 30 days, analyst projected EPS has increased 0.62% (from $6.50 to $6.54), while the price has decreased 2.55% (from $63.94 to $62.31). Might be undervalued at current levels, with a PEG ratio at 0.8, and P/FCF ratio at 6.08. The stock has gained 8.45% over the last year.

14. Bancolombia S.A. (CIB): Provides financial products and services to individual and corporate customers in Colombia, Panama, El Salvador, Puerto Rico, the Cayman Islands, Peru, Brazil, the United States, and Spain. Market cap of $12.53B. Dividend yield at 2.21%, payout ratio at 17.94%. Over the last 30 days, analyst projected EPS has increased 0.23% (from $4.34 to $4.35), while the price has decreased 1.59% (from $65.52 to $64.48). The stock has gained 0.71% over the last year.

*Projected EPS data and price data sourced from Yahoo! Finance, all other data sourced from Finviz.

Source: 14 Mega-Cap Dividend Stocks Undervalued By EPS Trends