Some stocks in the S & P 500 are cheaper compared to the sector they are in. CNBC Pro compiled a list of 11 stocks within the broad market index that have a lower forward price-to-earnings ratio compared to the broader segment average on Wall Street. Forward P/E allows a trader to evaluate a given company’s stock price relative to its projected future earnings. To calculate forward P/E, divide the stock’s current price by the estimated future earnings per share, which is typically a time span of the next 12 months. Forward P/E relies on projections for future earnings, which aren’t guaranteed. Still, the metric is valuable in that it allows a trader to better measure the financial health of a company. For this list, we focused on stocks that have a forward P/E rating of below 1, indicating that the stock is trading at a steep discount compared to its broader industry. AT & T ‘s forward P/E compared to the communications services sector average is a significant discount at 0.4 times. An average of price targets from analysts polled by FactSet implies 21.5% upside to AT & T’s stock price compared to current trading levels, with a mean rating of hold. T YTD mountain AT & T stock. Meanwhile, Walgreens ‘ stock also has a forward P/E significantly cheaper than the average in the consumer staples sector of the market. The company’s forward P/E sits at 0.3 times. An average of analyst price targets polled by FactSet implies 28.3% upside to Walgreens’ stock, with a mean rating of hold. General Motors has a forward P/E of 0.2 times earnings compared to the consumer discretionary sector. The mean stock rating on GM stock according to FactSet is overweight, with an average price target of $46.63 per share, or 44.1% upside. GM YTD mountain GM Stock. In utilities, NRG Energy has a forward P/E rating of 0.3 times. The company has an mean rating of hold according to FactSet, and an average anticipated upside of 16.4%.
This story originally appeared on CNBC
