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Despite the debt crisis in Europe, it remains helpful to look for European companies with greater profitability than their industry peers. If these stocks are underperforming the market, it could indicate undervalued opportunities.

We ran a screen on stocks of European countries trading on American exchanges for those that are underperforming the market, with quarterly performance was than -20%. We screened these stocks for those with high profitability, beating their industry peers by gross, operating, and pretax margins.

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.



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

List sorted by gross margin and industry.

1. Intercontinental Hotels Group plc (IHG): United Kingdom. Owns, manages, franchises, and leases hotels and resorts. Market cap of $4.67B. The stock has lost 23.54% over the past quarter. TTM gross margin at 55.33% vs. industry gross margin at 37.23%. TTM operating margin at 27.90% vs. industry operating margin at 19.35%. TTM pretax margin at 24.03% vs. industry pretax margin at 17.97%. The stock has gained 12.13% over the last year.

2. Ensco plc (ESV):
United Kingdom. Provides offshore contract drilling services to the oil and gas industry. Market cap of $9.32B. The stock has lost 23.01% over the past quarter. TTM gross margin at 51.46% vs. industry gross margin at 34.93%. TTM operating margin at 31.39% vs. industry operating margin at 17.99%. TTM pretax margin at 29.20% vs. industry pretax margin at 16.51%. It's been a rough couple of days for the stock, losing 6.19% over the last week.

3. Autoliv, Inc. (ALV):
Sweden. Develops, manufactures, and supplies automotive safety systems to automotive industry. Market cap of $4.33B. The stock has lost 37.88% over the past quarter. TTM gross margin at 24.74% vs. industry gross margin at 20.03%. TTM operating margin at 11.61% vs. industry operating margin at 7.86%. TTM pretax margin at 10.81% vs. industry pretax margin at 7.37%. This is a risky stock that is significantly more volatile than the overall market (beta = 2.01). The stock has performed poorly over the last month, losing 13.11%.

4. Global Indemnity plc (GBLI): Ireland. Provides admitted and non admitted specialty property and casualty insurance products worldwide. Market cap of $519.74M. The stock has lost 23.65% over the past quarter. TTM gross margin at 20.86% vs. industry gross margin at 16.92%. TTM operating margin at 19.76% vs. industry operating margin at 13.60%. TTM pretax margin at 18.0% vs. industry pretax margin at 12.22%. The stock has had a couple of great days, gaining 5.89% over the last week.

5. Chicago Bridge & Iron Company N.V. (CBI):
Netherlands. Provides engineering, procurement, and construction (EPC) solutions, as well as process technologies for the energy infrastructure projects. Market cap of $2.83B. The stock has lost 27.99% over the past quarter. TTM gross margin at 14.65% vs. industry gross margin at 12.06%. TTM operating margin at 7.90% vs. industry operating margin at 5.10%. TTM pretax margin at 8.12% vs. industry pretax margin at 4.34%. This is a risky stock that is significantly more volatile than the overall market (beta = 2.3). The stock has performed poorly over the last month, losing 19.8%.

6. Tenaris SA (TS):
Luxembourg. Engages in the manufacture and sale of steel pipe products. Market cap of $15.02B. The stock has lost 44.66% over the past quarter. TTM gross margin at 41.26% vs. industry gross margin at 34.93%. TTM operating margin at 18.54% vs. industry operating margin at 17.99%. TTM pretax margin at 19.76% vs. industry pretax margin at 16.51%. The stock is currently stuck in a downtrend, trading 12.27% below its SMA20, 24.72% below its SMA50, and 41.41% below its SMA200. The stock has performed poorly over the last month, losing 23.34%.

7. VimpelCom Ltd. (VIP):
Netherlands. Operates as an integrated telecommunications services provider, offering voice and data services through a range of wireless, fixed, and broadband technologies. Market cap of $12.41B. The stock has lost 25.43% over the past quarter. TTM gross margin at 69.73% vs. industry gross margin at 60.28%. TTM operating margin at 22.75% vs. industry operating margin at 21.03%. TTM pretax margin at 17.51% vs. industry pretax margin at 14.76%. The stock has performed poorly over the last month, losing 16.62%.

8. Core Laboratories NV (CLB):
Netherlands. Provides reservoir description, production enhancement, and reservoir management products and services to the oil and gas industry worldwide. Market cap of $4.19B. The stock has lost 20.69% over the past quarter. TTM gross margin at 35.16% vs. industry gross margin at 34.93%. TTM operating margin at 28.02% vs. industry operating margin at 17.99%. TTM pretax margin at 26.29% vs. industry pretax margin at 16.51%. The stock is a short squeeze candidate, with a short float at 10.41% (equivalent to 7.9 days of average volume). It's been a rough couple of days for the stock, losing 8.8% over the last week.

*Profitability data sourced from Fidelity, all other data sourced from Finviz.

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

Source: 8 Underperforming European Stocks With Impressive Profitability