Five Stocks With Low P/E Gurus Are Buying (Part II)

With these articles, thanks to the All-In-One screener of GuruFocusI give a selection of stocks that are trading with a very low P/E(ttm) ratio and that are catching the attention of multiple Gurus.

Discover Financial Services (DFS)

The company offers credit card loans, private student loans, personal loans, home equity loans and deposit products. It operates the Discover Network, a credit card payments network; the PULSE Network, automated teller machine, debit and electronic funds transfer network; and Diners Club International, global payments network. It has a market cap of $26.34 billion.

DFS is trading at about $59 with a trailing 12-month P/E multiple of 12.18, a forward P/E of 10.36, and it has an estimated five-year annual rose of 328%. During the last year the price declined by 5% and it has been as high as $66.75 and as low as $54.02.

The DCF model, gives a fair value of $71.84 that put the stock as undervalued and with a margin of safety of 18% at current prices. The Peter Lynch earnings line suggest the same fair price ($73.3).

During the last five years revenue rose by 8.10%, EBITDA by 22.10% and free cash flow was almost null.

The company is currently held by 12 gurus, and the main holder is James Barrow (Trades, Portfolio) who holds 1.10% of shares outstanding that is the 0.37% of his total assets), followed by Pioneer Investments (Trades, Portfolio) (that holds 0.77% of shares outstanding that is the 0.71% of his total assets) and NWQ Managers (Trades, Portfolio) that holds the 0.51% of outstanding shares.

Fifth Third Bancorp (FITB)

The company provides financial products and services to the retail, commercial, financial, governmental, educational and medical sectors. The company's business segments include Commercial Banking, Branch Banking, Consumer Lending and Investment Advisors. It has a market cap of $17.45 billion.

FITBÂ is trading at about $21 with a trailing 12-month P/E multiple of 12.30, a forward P/E of 11.74, and the stock has an estimated five-year annual rose of 64% .

During the last 12 months the price didn’t face any change, and it traded in a very narrow trading range since it has been as high as $21.90 and as low as $17.14.

The DCF model, gives a fair value of $25.67 that put the stock as undervalued and with a margin of safety of 17% at current prices. The Peter Lynch earnings line gives the same fair value ($25.60)

During last 5 years revenue dropped by 6.30%, EBITDA grew by 16.80 and free cash flow dropped by 9.30%. Over the last 12 months all these ratios have been dropping at a double-figure rate.

The company is currently held by 12 gurus and the main holder is James Barrow (Trades, Portfolio) who holds 1.94% of shares outstanding that is the 0.40% of his total assets), followed by Richard Pzena (Trades, Portfolio) (who holds 0.43% of shares outstanding that is the 0.37% of his total assets) and Hotchkis & Wiley that holds the 0.23% of outstanding shares.

Deere & Co (DE)

The company is a provider of advanced products and services for agriculture and forestry and a provider of advanced products and services for construction, lawn and turf care, landscaping and irrigation. It has a market cap of $31.91 billion.

DE is trading at about $96 with a trailing 12-month P/E multiple of 13.20, a forward P/E of 17.30 and during the last five years the price of the stock rose by 61%.

During the last year the stock rose by 7% and has been as high as $94.88 and as low as $78.88.

The DCF model, gives a fair value of $135.52 that put the stock as undervalued, with a margin of safety of 31% at current prices. The Peter Lynch earnings line gives a lower fair value of $114.3.

During the last five years revenue grew by 13.90%, EBITDA grew by 19.20 and free cash flow did not face any change. All these ratios are confirmed over the last 10 years but are declining when we have a look at the last year.

The company is currently held by 16 gurus and the main holder is Warren Buffett (Trades, Portfolio) who holds 5.18% of shares outstanding that is the 1.42% of his total assets), followed by First Eagle Investment (Trades, Portfolio) (who holds 1.37% of shares outstanding that is the 0.96% of his total assets) and PRIMECAP Management (Trades, Portfolio) that holds the 0.80% of outstanding shares.

Franklin Resources Inc (BEN)

The company together with its subsidiaries operates as an investment management company it also provides investment management and related services to investors in jurisdictions worldwide. It has a market cap of $31.28 billion.

BEN is trading at about $50 with a trailing 12 month P/E multiple of 13.23, a forward P/E of 13.04 and during the last 5 years it rose by 77% .

During the last year the price dropped by 13% and has been as high as $59.43 and as low as $49.12.

The DCF model, gives a fair value of $66.94 that put the stock as undervalued and with a margin of safety of 25% at current prices. The Peter Lynch earnings line fair value is $56.8.

During last 5 years revenue grew by 16.10%, EBITDA grew by 19.00 and free cash flow by 23.00%. All these ratios are confirmed over the last 10 years and even over the last 12 months.

The company is currently held by 21 gurus and the main holder is Mason Hawkins (Trades, Portfolio) who holds 1.37% of shares outstanding that is the 2.73% of his total assets), followed by Bill Nygren (Trades, Portfolio) (who holds 0.88% of shares outstanding that is the 1.66% of his total assets) and Richard Pzena (Trades, Portfolio) who holds the 0.78% of outstanding shares.

Bed Bath & Beyond Inc (BBBY)

The company and its subsidiaries operate a chain of retail stores in addition; the company is a partner in a joint venture which operates three retail stores in Mexico under the name Bed Bath & Beyond. It has a market cap of $12.85 billion.

BBBY is trading at about $71 with a trailing 12 month P/E ratio of 13.46, a forward P/E of 12.94 and during the last 5 years the price rose by 89%. Over the last year it rose by 24% and it has been as high as $79.64 and as low as $54.96.

The DCF model, gives a fair value of $92.64 that put the stock as undervalued and with a margin of safety of 23% at current prices. The Peter Lynch earnings line fair value is $75.5 that means the stock in this moment if fairly priced.

During the last five years revenue grew by 16.30%, EBITDA grew by 15.80 and free cash flow by 10.80%.

The company is currently held by 20 gurus and the main holder is Hotchkis & Wiley that holds 2.89% of shares outstanding that is the 1.34% of his total assets), followed by PRIMECAP Management (Trades, Portfolio) (that holds 2.58% of shares outstanding that is the 0.34% of his total assets) and Chuck Royce (Trades, Portfolio) who holds the 1.58% of outstanding shares.

Conclusions

All the above stocks are offering to investors a margin of safety at current prices and are trading with a very low P/E. Let’s do a summary