A List of Low Price to Earnings Stocks with “Safe” Altman Z-Scores
In order to choose stocks that are cheap but are at low risk of bankruptcy, we need a quantitative predictor of credit risk. Fortunately, the Altman Z-Score can help distinguish value investments from value traps.
The Altman Z-score places companies into three groups: “safe” (Z-score > 2.99), “grey” (Z-score between 2.99 and 1.81) and “distressed*” (Z-score < 1.81). This metric is surprisingly useful for identifying bankruptcy risk in the coming year. Atlman’s method of segmenting companies uses fundamental (financial statement) data and market capitalization only.** Beyond credit risk prediction, companies with higher Z-scores have been shown to outperform companies with lower Z-scores, in aggregate.
The Altman Z-score was recently calculated for hundreds of companies with P/E multiples at or below 10. Low P/E companies which scored in the “safe” zone are presented with below:
Ticker | Company | Altman Z-score | P/E | P/B |
Insignia Systems Inc. | 9.38 | 0.59 | 0.97 | |
Bassett Furniture Industries Inc. | 4.04 | 1.61 | 0.56 | |
China Natural Resources Inc. | 198.66 | 1.81 | 2.19 | |
Westell Technologies Inc. | 4.85 | 1.9 | 0.86 | |
Kingold Jewelry, Inc. | 13.65 | 2 | 0.49 | |
Exceed Company Ltd. | 4.46 | 2.06 | 0.41 | |
Safeguard Scientifics, Inc. | 4.20 | 2.15 | 0.9 | |
Pendrell Corporation | 3.65 | 2.19 | 2.49 | |
Maxygen, Inc. | 24.47 | 2.47 | 0.92 | |
inTEST Corp. | 6.03 | 2.78 | 1.15 | |
USA Mobility, Inc. | 3.80 | 2.82 | 1.29 | |
Asia Entertainment & Resources | 11.65 | 2.95 | 1.74 | |
Pro-Dex Inc. | 3.69 | 3.08 | 0.78 | |
The LGL Group, Inc. | 3.34 | 3.38 | 0.72 | |
Omega Protein Corp. | 3.07 | 3.49 | 0.72 | |
DepoMed Inc. | 5.84 | 3.56 | 2.57 | |
Amtech Systems Inc. | 3.16 | 3.77 | 0.72 | |
Career Education Corp. | 3.04 | 3.79 | 0.62 | |
Power-One Inc. | 3.62 | 4.01 | 1.1 | |
Emerson Radio Corp. | 4.54 | 4.09 | 0.79 | |
Momenta Pharmaceuticals | 35.87 | 4.26 | 2.37 | |
Visteon Corp. | 3.19 | 4.47 | 1.99 | |
Johnson Outdoors Inc. | 3.69 | 4.62 | 0.93 | |
Integrated Silicon Solution Inc. | 3.99 | 4.67 | 1.05 | |
Rubicon Technology, Inc. | 7.15 | 4.67 | 1.01 | |
Vista Gold Corp. | 3.78 | 4.88 | 1.63 | |
Tesoro Corporation | 4.18 | 4.91 | 0.84 | |
Lincoln Educational Services | 3.52 | 4.95 | 0.73 | |
Brooks Automation Inc. | 3.12 | 5.12 | 1.3 | |
Nacco Industries Inc. | 3.41 | 5.17 | 1.38 | |
Valero Energy Corporation | 3.95 | 5.21 | 0.68 | |
Sauer-Danfoss Inc. | 4.58 | 5.24 | 3.42 | |
OmniVision Technologies Inc. | 3.57 | 5.29 | 0.88 | |
Atlantic Power Corporation | 4.45 | 5.31 | 2.53 | |
Quanex Building Products | 4.77 | 5.36 | 1.34 | |
Ballantyne Strong, Inc | 3.59 | 5.47 | 0.99 | |
ITT Educational Services Inc. | 8.33 | 5.61 | 13.27 | |
SL Industries Inc. | 4.41 | 5.66 | 1.31 | |
Dillard's Inc. | 3.19 | 5.79 | 1.1 | |
Medicines Co. | 5.11 | 5.91 | 2.07 | |
Alpha & Omega Semiconductor, Ltd. | 3.05 | 5.97 | 0.69 | |
Kulicke & Soffa Industries Inc. | 4.48 | 5.97 | 1.6 | |
Appliance Recycling Centers of America | 3.55 | 6.01 | 1.82 | |
PowerSecure International, Inc. | 3.12 | 6.08 | 0.92 | |
Core Molding Technologies Inc. | 3.82 | 6.14 | 1.26 | |
LML Payment Systems Inc. | 5.83 | 6.23 | 1.74 | |
Kreisler Manufacturing Corp. | 4.98 | 6.25 | 0.45 | |
Rocky Brands, Inc. | 3.06 | 6.25 | 0.61 | |
ClearOne Communications Inc. | 4.37 | 6.28 | 1.02 | |
Seaboard Corp. | 5.32 | 6.28 | 1.14 | |
LyondellBasell Industries NV | 3.86 | 6.32 | 1.4 | |
Entropic Communications, Inc. | 18.21 | 6.34 | 1.58 | |
Global Power Equipment Group Inc. | 6.61 | 6.36 | 1.48 | |
Technical Communications Corp. | 9.57 | 6.36 | 1.05 | |
Kraton Performance Polymers Inc. | 3.08 | 6.37 | 1.35 | |
Corning Inc. | 3.44 | 6.41 | 0.98 | |
AMCON Distributing Co. | 11.54 | 6.43 | 0.89 | |
Gannett Co., Inc. | 3.34 | 6.47 | 1.32 | |
AXT Inc. | 4.78 | 6.5 | 1.05 | |
Tii Network Technologies, Inc. | 3.43 | 6.5 | 0.48 | |
American Greetings Corp. | 3.19 | 6.52 | 0.68 | |
CVR Energy, Inc. | 4.39 | 6.52 | 1.68 | |
Ocean Bio-Chem Inc. | 3.59 | 6.65 | 1.23 | |
Adams Resources & Energy Inc. | 9.51 | 6.74 | 1.28 | |
The Standard Register Company | 3.06 | 6.74 | 1.34 | |
Cirrus Logic Inc. | 8.80 | 6.76 | 2.72 | |
Freeport-McMoRan Copper & Gold | 3.45 | 6.8 | 2.4 | |
Ultra Clean Holdings Inc. | 5.32 | 7.01 | 1.26 | |
Almost Family Inc. | 4.92 | 7.13 | 0.8 | |
Flanigan's Enterprises Inc. | 3.22 | 7.15 | 0.72 | |
Coventry Health Care Inc. | 3.02 | 7.17 | 0.94 | |
Keynote Systems Inc. | 6.79 | 7.28 | 1.56 | |
Avnet Inc. | 4.30 | 7.34 | 1.21 | |
Sonic Automotive Inc. | 4.07 | 7.36 | 1.53 | |
Arrow Electronics, Inc. | 3.55 | 7.38 | 1.16 | |
Servotronics Inc. | 4.56 | 7.38 | 0.89 | |
Versar Inc. | 4.42 | 7.49 | 0.93 | |
Bridgepoint Education, Inc. | 7.30 | 7.52 | 3.64 | |
NCI, Inc. | 3.91 | 7.53 | 0.9 | |
Delek US Holdings Inc. | 4.08 | 7.55 | 1.03 | |
Forest Laboratories Inc. | 6.10 | 7.57 | 1.58 | |
Metalico Inc. | 3.19 | 7.58 | 0.83 | |
Applied Materials Inc. | 5.01 | 7.59 | 1.64 | |
Nutraceutical International Corp. | 4.00 | 7.61 | 0.97 | |
Nanometrics Incorporated | 6.91 | 7.64 | 2.02 | |
Diamond Offshore Drilling Inc. | 3.75 | 7.7 | 1.84 | |
Patrick Industries Inc. | 3.62 | 7.82 | 1.64 | |
Lam Research Corporation | 4.93 | 7.85 | 1.93 | |
Smithfield Foods Inc. | 3.48 | 7.86 | 1.1 | |
Fabrinet | 5.83 | 7.88 | 1.59 | |
Oplink Communications Inc. | 6.58 | 7.9 | 1.14 | |
Universal Power Group Inc. | 3.77 | 7.93 | 0.47 | |
Dell Inc. | 3.46 | 7.95 | 3.18 | |
AVCA | Advocat Inc. | 3.44 | 7.97 | 1.19 |
Lexmark International Inc. | 3.16 | 7.99 | 1.69 | |
Vascular Solutions Inc. | 13.00 | 8 | 2.51 | |
Chevron Corporation | 4.55 | 8.03 | 1.78 | |
The Andersons, Inc. | 4.58 | 8.04 | 1.52 | |
Advanced Energy Industries, Inc. | 4.71 | 8.17 | 1.13 | |
SED International Holdings, Inc. | 4.13 | 8.17 | 0.57 | |
Western Refining Inc. | 4.12 | 8.19 | 1.5 | |
IXYS Corp. | 4.85 | 8.2 | 1.43 | |
Caribou Coffee Company, Inc. | 6.83 | 8.24 | 2.91 | |
SYNNEX Corp. | 5.37 | 8.27 | 1 | |
PDL BioPharma, Inc. | 5.16 | 8.28 | 0 | |
G-III Apparel Group, Ltd. | 3.43 | 8.32 | 1.31 | |
Atmel Corporation | 7.29 | 8.37 | 3.46 | |
Insight Enterprises Inc. | 4.82 | 8.47 | 1.28 | |
Best Buy Co. Inc. | 4.03 | 8.5 | 1.38 | |
Nash Finch Co. | 5.60 | 8.5 | 0.88 | |
Friedman Industries Inc. | 8.16 | 8.53 | 1.27 | |
ADDvantage Technologies Group | 3.77 | 8.54 | 0.61 | |
MANT] | ManTech International Corporation | 3.89 | 8.55 | 1.1 |
Destination Maternity Corporation | 4.92 | 8.56 | 2.14 | |
Sutron Corp. | 6.30 | 8.56 | 1.25 | |
The Mosaic Company | 6.10 | 8.58 | 1.93 | |
Delta Apparel Inc. | 3.39 | 8.62 | 1.12 | |
AVX Corp. | 8.35 | 8.64 | 1.02 | |
CF Industries Holdings, Inc. | 3.15 | 8.69 | 2.46 | |
Stillwater Mining Co. | 3.68 | 8.69 | 1.57 | |
Miller Industries Inc. | 4.81 | 8.76 | 1.13 | |
La-Z-Boy Inc. | 4.60 | 8.8 | 1.52 | |
TESSCO Technologies Inc. | 5.44 | 8.87 | 1.26 | |
Horsehead Holding Corp. | 3.19 | 8.87 | 1.03 | |
Stein Mart Inc. | 4.08 | 8.88 | 1.11 | |
Archer Daniels Midland Company | 3.66 | 8.89 | 1.06 | |
Green Plains Renewable Energy | 3.12 | 8.94 | 0.66 | |
Westlake Chemical Corp. | 3.89 | 9 | 1.64 | |
TeleNav, Inc. | 6.32 | 9.04 | 1.66 | |
Allied Motion Technologies Inc. | 4.14 | 9.05 | 1.34 | |
Hallador Energy Company | 4.36 | 9.05 | 1.85 | |
Material Sciences Corp. | 4.73 | 9.06 | 1.24 | |
WABCO Holdings Inc. | 4.45 | 9.1 | 5.15 | |
GameStop Corp. | 3.53 | 9.11 | 1.16 | |
Kronos Worldwide Inc. | 3.71 | 9.19 | 2.83 | |
Crown Crafts Inc. | 5.20 | 9.22 | 1.12 | |
DST Systems Inc. | 3.06 | 9.22 | 2.92 | |
Bunge Limited | 3.46 | 9.24 | 0.73 | |
China Cord Blood Corporation | 12.76 | 9.24 | 1 | |
DeVry, Inc. | 5.61 | 9.24 | 2.01 | |
KBR, Inc. | 3.51 | 9.26 | 1.68 | |
ConocoPhillips | 3.15 | 9.3 | 1.47 | |
Frequency Electronics Inc. | 4.16 | 9.31 | 0.9 | |
Timken Co. | 4.06 | 9.33 | 1.8 | |
CTC Media, Inc | 6.48 | 9.35 | 1.88 | |
International Rectifier Corporation | 4.70 | 9.35 | 1.04 | |
Superior Industries International | 5.32 | 9.35 | 1.08 | |
Ennis Inc. | 4.23 | 9.37 | 0.98 | |
WidePoint Corp. | 3.36 | 9.38 | 2.14 | |
Northrop Grumman Corporation | 3.06 | 9.4 | 1.29 | |
Flexsteel Industries Inc. | 5.70 | 9.42 | 0.73 | |
Eli Lilly & Co. | 3.72 | 9.52 | 3.07 | |
Pan American Silver Corp. | 122.56 | 9.53 | 1.53 | |
Jewett-Cameron Trading Co. Ltd. | 7.95 | 9.55 | 1.42 | |
CRDN | Ceradyne Inc. | 4.09 | 9.56 | 1.01 |
Valassis Communications Inc. | 3.24 | 9.58 | 1.91 | |
Unifi Inc. | 3.64 | 9.6 | 0.51 | |
Susser Holdings Corporation | 5.43 | 9.62 | 1.52 | |
TriQuint Semiconductor, Inc. | 5.55 | 9.62 | 0.86 | |
GSI Technology Inc. | 7.12 | 9.74 | 1 | |
KLA-Tencor Corporation | 5.84 | 9.78 | 2.71 | |
Maidenform Brands, Inc. | 4.54 | 9.78 | 1.8 | |
Communications Systems Inc. | 7.46 | 9.81 | 1.22 | |
Kadant Inc. | 3.30 | 9.84 | 1.2 | |
USANA Health Sciences Inc. | 8.39 | 9.9 | 2.93 | |
Atwood Oceanics, Inc. | 3.96 | 9.93 | 1.62 | |
Air T Inc. | 6.01 | 9.95 | 0.77 | |
RadioShack Corp. | 4.45 | 9.95 | 1.23 | |
Cascade Corp. | 6.24 | 9.96 | 1.77 | |
Darling International Inc. | 3.99 | 9.99 | 1.74 | |
Coleman Cable, Inc. | 3.08 | 10 | 6.07 | |
Gordmans Stores, Inc. | 5.33 | 10 | 3.48 |
The companies on this list are value buys that have a low probability of bankruptcy. A diversified portfolio of 30 or more of these stocks should offer attractive risk-adjusted returns. On an individual stock basis, additional research is warranted.
*“Distressed” was a label coined by researchers, and should not be taken to mean that any company is bankrupt or in default on the basis of this calculation alone. Credit scoring is not fate, only prediction based on relative past performance of companies grouped by key variables. Time will tell.
**Volatility has be incorporated into a credit scoring model to improve accuracy, but this would reduce the value of a fundamentals-only model for indicating companies for option strategies.
Disclaimer: This article was written to provide investor information and education, and should not be construed as a guarantee or investment advice. I have no idea what your individual risk, time-horizon, and tax circumstances are: please seek the personal advice of a financial planner. This article uses third-party data and may contain approximations and errors. Please check estimates and data for yourself before investing.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
