20 S&P 500 Stocks With Falling P/E And Rising EPS

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Includes: AABA, AMP, CELG, COF, DISCA, FDX, GILD, JPM, KO, L, LLY, MHS, MMC, MSFT, NEM, NOC, NTAP, PNC, STJ, WFC
by: Kapitall

Looking for ideas on how to find potentially undervalued stocks?

If a company’s P/E ratio has fallen over time, as its earnings steadily rise, it is a sign that price has not proportionately increased with earnings. In other words, the company’s earnings may not be fully priced into the stock, and the stock may be undervalued.

We ran a screen on the S&P 500 (NYSEARCA:SPY) for stocks exhibiting these trends of falling P/E along with rising EPS, potentially indicating undervalued opportunities.

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.

(Click chart for more detail)

Do you think these stocks are failing to price in their EPS growth? Use this list as a starting-off point for your own analysis.

List sorted by market cap.

1. Microsoft Corporation (NASDAQ:MSFT): Develops, licenses, and supports a range of software products and services for various computing devices worldwide. Market cap of $228.95B. TTM P/E at 10.11 vs. 3-year average at 12.30. Last year EPS at $2.69 vs. prior-year EPS at $2.10. Might be undervalued at current levels, with a PEG ratio at 0.89, and P/FCF ratio at 11.77. The stock has gained 9.88% over the last year.

2. The Coca-Cola Company (NYSE:KO): Distributes, and markets nonalcoholic beverages worldwide. Market cap of $153.91B. TTM P/E at 12.30 vs. 3-year average at 15.62. Last year EPS at $5.06 vs. prior-year EPS at $2.93. The stock has gained 12.75% over the last year.

3. Wells Fargo & Company (NYSE:WFC): Provides retail, commercial, and corporate banking services primarily in the United States. Market cap of $132.95B. TTM P/E at 9.57 vs. 3-year average at 16.13. Last year EPS at $2.21 vs. prior-year EPS at $1.75. Might be undervalued at current levels, with a PEG ratio at 0.88, and P/FCF ratio at 4.76. It's been a rough couple of days for the stock, losing 6.57% over the last week.

4. JPMorgan Chase & Co. (NYSE:JPM): Provides various financial services worldwide. Market cap of $125.74B. TTM P/E at 7.01 vs. 3-year average at 14.03. Last year EPS at $3.96 vs. prior-year EPS at $2.24. The stock has lost 13.52% over the last year.

5. Eli Lilly & Co. (NYSE:LLY): Develops, manufactures, and sells pharmaceutical products worldwide. Market cap of $44.80B. TTM P/E at 9.04 vs. 3-year average at 16.45. Last year EPS at $4.58 vs. prior-year EPS at $3.94. Offers a good dividend, and appears to have good liquidity to back it up--dividend yield at 5.06%, current ratio at 1.73, and quick ratio at 1.4. The stock has gained 13.52% over the last year.

6. Newmont Mining Corp. (NYSE:NEM): Engages in the acquisition, exploration, and production of gold and copper properties. Market cap of $33.87B. TTM P/E at 13.62 vs. 3-year average at 17.93. Last year EPS at $4.61 vs. prior-year EPS at $2.69. The stock has performed poorly over the last month, losing 10.84%.

7. Gilead Sciences Inc. (NASDAQ:GILD): Engages in the discovery, development, and commercialization of therapeutics for the treatment of life threatening diseases worldwide. Market cap of $31.48B. TTM P/E at 11.79 vs. 3-year average at 15.31. Last year EPS at $3.32 vs. prior-year EPS at $2.82. Might be undervalued at current levels, with a PEG ratio at 0.77, and P/FCF ratio at 9.98. The stock has gained 6.28% over the last year.

8. Celgene Corporation (NASDAQ:CELG): Develops, and commercializes various therapies to treat cancer and immune-inflammatory related diseases. Market cap of $29.96B. TTM P/E at 30.24 vs. 3-year average at 76.77. Last year EPS at $1.88 vs. prior-year EPS at $1.66. The stock has gained 12.37% over the last year.

9. PNC Financial Services Group Inc. (NYSE:PNC): Operates as a diversified financial services company. Market cap of $27.01B. TTM P/E at 8.25 vs. 3-year average at 14.14. Last year EPS at $5.04 vs. prior-year EPS at $4.27. The stock has lost 0.7% over the last year.

10. FedEx Corporation (NYSE:FDX): Provides transportation, e-commerce, and business services in the United States and internationally. Market cap of $23.88B. TTM P/E at 15.66 vs. 3-year average at 30.52. Last year EPS at $4.57 vs. prior-year EPS at $3.76. The stock has lost 14.83% over the last year.

11. Yahoo! Inc. (YHOO): Operates as a digital media company that delivers personalized digital content and experiences, across devices and worldwide. Market cap of $20.13B. TTM P/E at 18.89 vs. 3-year average at 29.08. Last year EPS at $0.90 vs. prior-year EPS at $0.42. The stock has had a good month, gaining 11.%.

12. MedcoHealth Solutions Inc. (NYSE:MHS): Provides clinically-driven pharmacy services for private and public employers, health plans, labor unions, government agencies, and individuals primarily in the United States. Market cap of $18.47B. TTM P/E at 14.47 vs. 3-year average at 19.77. Last year EPS at $3.16 vs. prior-year EPS at $2.61. The stock has lost 7.81% over the last year.

13. Capital One Financial Corp. (NYSE:COF): Operates as the bank holding company for the Capital One Bank (NYSE:USA), National Association and Capital One, National Association, which provide various financial products and services in the United States, Canada, and the United Kingdom. Market cap of $18.26B. TTM P/E at 5.41 vs. 3-year average at 14.13. Last year EPS at $6.68 vs. prior-year EPS at $0.98. It's been a rough couple of days for the stock, losing 8.49% over the last week.

14. Marsh & McLennan Companies, Inc. (NYSE:MMC): Provides advice and solutions in the areas of risk, strategy, and human capital. Market cap of $15.35B. TTM P/E at 17.39 vs. 3-year average at 32.25. Last year EPS at $1.00 vs. prior-year EPS at $0.43. The stock has gained 17.89% over the last year.

15. Northrop Grumman Corporation (NYSE:NOC): Provides products, services, and solutions in aerospace, electronics, information systems, shipbuilding, and technical service sectors. Market cap of $15.04B. TTM P/E at 8.51 vs. 3-year average at 19.72. Last year EPS at $6.77 vs. prior-year EPS at $4.87. The stock has gained 0.65% over the last year.

16. Loews Corporation (NYSE:L): Operates primarily as a commercial property and casualty insurance company in the United States. Market cap of $14.73B. TTM P/E at 13.20 vs. 3-year average at 29.89. Last year EPS at $3.12 vs. prior-year EPS at $1.31. The stock has lost 7.72% over the last year.

17. NetApp, Inc. (NASDAQ:NTAP): Engages in the design, manufacturing, marketing, and technical support of networked storage solutions. Market cap of $14.19B. TTM P/E at 23.93 vs. 3-year average at 34.50. Last year EPS at $1.71 vs. prior-year EPS at $1.13. The stock has lost 25.47% over the last year.

18. St. Jude Medical Inc. (NYSE:STJ): Develops, manufactures, and distributes cardiovascular and implantable neurostimulation medical devices worldwide. Market cap of $12.83B. TTM P/E at 13.92 vs. 3-year average at 20.0. Last year EPS at $2.75 vs. prior-year EPS at $2.26. The stock has gained 2.5% over the last year.

19. Discovery Communications, Inc. (NASDAQ:DISCA): Operates as a non fiction media and entertainment company worldwide. Market cap of $11.24B. TTM P/E at 19.01 vs. 3-year average at 23.26. Last year EPS at $1.47 vs. prior-year EPS at $1.30. Might be undervalued at current levels, with a PEG ratio at 0.85, and P/FCF ratio at 11.8. The stock has lost 5.3% over the last year.

20. Ameriprise Financial Inc. (NYSE:AMP): Provides financial planning, products, and services primarily in the United States. Market cap of $9.66B. TTM P/E at 8.59 vs. 3-year average at 16.86. Last year EPS at $4.18 vs. prior-year EPS at $2.95. Might be undervalued at current levels, with a PEG ratio at 0.64, and P/FCF ratio at 10.34. The stock has lost 19.01% over the last year.

*Data from October 19. P/E and EPS data sourced from Screener.co, 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.