S&P 500 Stocks Trading Below Book Value

Highlighted stocks include Archer Daniels Midland Company (ADM), KB Home (KBH), Southwest Airlines Co. (LUV) and The New York Times Company (NYT).

Given yesterday’s multi-year closing low, I designed a screen to see what S&P 500 stocks were trading at or below book value. A P/B [price-to-book] multiple of 1.0 or lower is an important multiple because it means that investors are not giving the company any credit for its future earnings potential.

Since I also wanted to factor in timeliness, I further restricted the list to only Zacks #1 Rank (”strong buy”) or Zacks #2 Rank (”buy”) stocks. These are companies that recently topped expectations and/or have had their earnings estimates revised upwards by brokerage analysts.

What turned up was a rather diverse list. It includes companies whose futures should be brighter such as Archer Daniels Midland Company (ADM) and Southwest Airlines Co. (LUV). It also includes companies that are facing very difficult industry conditions such as The New York Times Company (NYT) and KB Home (KBH).

The reason for the diversity is that I ran a purely quantitative screen, which did not consider industry or company decisions. Investors therefore should use this list a starting point for further research.

(Zacks Premium subscribers can easily recreate this screen using our Custom Screener. Research Wizard subscribers can recreate the screen on the software program. The parameters are simply Zacks Rank of 1 or 2, Price-to-Book below 1.1 and membership in the S&P 500.)

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