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Price to earnings ratio is the most commonly used investment metric. The assessment of relative changes in P/E ratio over the course of time highlights the low and high multiples investors are willing to pay for the current and future earnings of a company. Most investors would like to compare the current P/E of the company with its historical averages. Comparing a company's current P/E ratio with benchmarks such as its historical P/E average can help a value investor determine if the stock is cheap, fully valued or overpriced.

We identified the top 5 consumer discretionary stocks trading below or near the average of its yearly low P/E for the last 5 years. These securities are pretty undervalued compared to other securities in this sector.

Washington Post (WPO): The Washington Post Company and its subsidiaries operate as a diversified education and media company in the United States and internationally. The company provides a range of educational services, including higher education, professional training, test preparation and K12 learning services. The company had an average yearly minimum forward earnings multiples of 36.84 and a mean yearly average forward earnings multiples of 46.12 over the last 5 years.

With these multiples the company would be valued at $1251.30 and $1566.38 based on its historical minimal and average FPE estimates. The stock has a sum of growth and yield to P/E (GY2PE a popular metric coined by Peter Lynch, ratio of 1 is considered fair value and 2 and greater is considered under valued ) of 2.03. WPO is currently trading at $374.64, dropping 15% or $66.21 during the last year.

Wynn Resorts (WYNN): Wynn Resorts, Limited with its subsidiaries engages in the development, ownership and operation of destination casino resorts. Wynn owns and operates two destination casino resorts Wynn Las Vegas and Wynn Macau and Encore at Wynn Macau. The company had an average yearly minimum forward earnings multiples of 17.90 and a mean yearly average forward earnings multiples of 35.32 over the last 5 years. With these multiples the company would be valued at $204.75 and $404.11 based on its historical minimal and average FPE estimates. The company has a GY2PE of 1.88. WYNN is currently trading at $112.01, remaining flat for 2011.

DIRECTV Group (DTV): DIRECTV is a provider of digital television entertainment. The company is engaged in acquiring, promoting, selling and/or distributing digital entertainment programming primarily via satellite to residential and commercial subscribers in United States and Latin America. DTV had an average yearly minimum forward earnings multiples of 12.13 and a mean yearly average forward earnings multiples of 15.18 over the last 5 years. With these multiples the company would be valued at $59.40 and $74.34 based on its historical minimal and average FPE estimates. The company has a GY2PE of 1.67. DTV is currently trading at $44.01, raising 6.5% or $2.67 over the last year.

Interpublic Group (IPG): The Interpublic Group of Companies, Inc. is a global advertising and marketing services company. IPG specializes in consumer advertising, digital marketing, media planning and buying, public relations and specialized communications disciplines. IPG had an average yearly minimum forward earnings multiples of 11.01 and a mean yearly average forward earnings multiples of 20.22 over the last 5 years. With these multiples the company would be valued at $8.66 and $15.90 based on its historical minimal and average FPE estimates. The company has a GY2PE of 1.35. IPG is currently trading at $9.73, dropping 2.87% or $0.30 over the last year.

Hasbro Inc (HAS): Hasbro, Inc. engages in the design, manufacture, and marketing of games and toys. The company principally provides children’s and family leisure time and entertainment products and services. Hasbro sells its products through its own sales force and distributors primarily in the United States and internationally. The company had an average yearly minimum forward earnings multiples of 9.94 and a mean yearly average forward earnings multiples of 12.87 over the last 5 years. With these multiples the company would be valued at $28.22 and $36.52 based on its historical minimal and average FPE estimates. The company has a GY2PE of 1.43. HAS is currently trading at $31.89, dropping 29.21% or $13.44 over the last year.

Source: 5 Undervalued Consumer Discretionary Stocks