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Top Losers To Consider: United Parcel Service (UPS), Kimberly-Clark (KMB), State Street (STT)
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We look at United Parcel Service Inc (NYSE:UPS), Kimberly-Clark Corporation (NYSE:KMB), and State Street (NYSE:STT), 3 companies which were some of the top losers in trading, to assess which may provide the best value for investors to consider buying and which are over, under or fairly priced.
Rather than the usual Price to Earnings (P/E) multiple method, we feel the best way to assess which of United Parcel Service (UPS), Kimberly-Clark (KMB), State Street (STT) is the best value currently is to use the PEG ratio (P/E to growth). This PEG multiple takes into account the expected long term growth in earnings of the companies rather than merely the growth for one earnings period ahead as forward P/E does. As a rule of thumb, a stock with a PEG of between 0 and 1 is usually considered to be underpriced, between 1 and 2 to be at fair value and over 2 to be overpriced.
United Parcel Service (NYSE:UPS) [Trend Analysis] had a last closing stock price of $102.93 after moving -9.91% in trading with a trailing 12 month P/E multiple of 25.54 and an estimated forward P/E multiple of 18.24. United Parcel Service (UPS) has an estimated 5 year annual growth of 10.94% and a PEG multiple of 2.34. Based on the PEG ratio of UPS being 2.34, we consider United Parcel Service to likely be overpriced.
Kimberly-Clark (NYSE:KMB) [Trend Analysis] had a last closing stock price of $111.65 after moving -6.16% in trading with a trailing 12 month P/E multiple of 19.76 and an estimated forward P/E multiple of 18.62. Kimberly-Clark (KMB) has an estimated 5 year annual growth of 7.00% and a PEG multiple of 2.82. Based on the PEG ratio of KMB being 2.82, we consider Kimberly-Clark to likely be overpriced.
State Street (NYSE:STT) [Trend Analysis] had a last closing stock price of $72.40 after moving -6.08% in trading with a trailing 12 month P/E multiple of 15.47 and an estimated forward P/E multiple of 13.57. State Street (STT) has an estimated 5 year annual growth of 10.43% and a PEG multiple of 1.48. Based on the PEG ratio of STT being 1.48, we consider State Street to likely be at fair value.
Based on the above, it would appear that State Street offers the best value, as it has the lowest PEG ratio of 1.48, when compared to the other stocks. This makes it appear less expensive due to having a lower stock price against current earnings and predicted growth in those earnings in the coming 5 years. However, on an individual stock basis, the analysis concludes that United Parcel Service (NYSE:UPS) is overpriced, Kimberly-Clark (NYSE:KMB) is overpriced and State Street (NYSE:STT) is at fair value.
