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What Dow components are holding it down? Or, to put it another way, which of the 30 stocks in that index are looking more like value stocks than the others? Well, there are 4 stocks with price-earnings ratios of 10 or less than 10, an extraordinary achievement of some kind given the fervor for stocks in general recently.
Here they are:
The historic chemicals company, headquartered in Midland, Michigan, has a market capitalization of $43.71 billion dollars and an enterprise value of $57.23 billion. At a time when the price-earnings ratio for the S&P 500 is 39, it’s semi-amazing that Dow’s p/e is all the way down there at 7.
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The company’s price to book metric is 2.66, a reasonable figure given that the S&P 500’s price to book now comes in at 4.82. Earnings per share this year increased by 167% but Wall Street analysts are predicting that next year’s earnings will be off by more than 20.%. Meantime, investors collect a 4.74% dividend yield.
Earnings per share grew at a 4.90% this year and the past 5-year EPS growth rate was 16.20%. Wall Street expectations for earnings next year are negative: a minus 30% year is anticipated. Long-term debt is greatly exceeded by shareholder equity. Intel pays a dividend yield of 2.60%.
J.P. Morgan Chase.
It’s the biggest of the New York City banks with a market capitalization of $490 billion and an enterprise value of $117 billion. The price-earnings ratio is 10 and J.P. Morgan Chase trades at just 1.94 book value. Average daily volume on the New York Stock Exchange is a highly liquid 11 million shares.
The big bank’s earnings per share this year are off by 17.20% and the EPS growth record for the past 5 years is a relatively low 8.10%. The company pays a $4/share dividend which amounts to an annualized yield of 2.39%. Bank analysts will be closely watching how interest rates for 2022 might affect J.P. Morgan Chase.
The telecommunications giant, based in New York, shows a market capitalization of $227 billion and an enterprise value of $395 billion. The Dow Jones Industrial Average component trades with a price-earnings ratio of 10 and at 2.92 book value. These are close to 10-year lows.
Verizon’s earnings per share are down this year by 7.6%. The past 5-year EPS growth rate is a negative .30%. Wall Street analysts expect earnings to begin to increase again next year and over the next 5 years. Investors continue to receive a dividend of $2.56/share for a 4.72% yield.
These 4 are the Dow Jones Industrial Average components with the lowest price-earnings ratios. Some investors used to employ a similar “dogs of the Dow” approach and invest in just these types of equities to the exclusion of all else. Let’s check back in a year from now and see how it worked.
Not investment advice. For educational purposes only. Always consult with a registered investment advisor before making any decisions.