Eurostat, the statistical office of the European Union, released estimates of industrial production in the euro zone, which surprised analysts as output increased by 0.4% compared to March. This is a decline of 0.6% compared to the same month last year, but there is still some good news among the data. The euro zone's second largest economy, France, saw industrial production grow by 2.3%, second only to Ireland's 3.0% (but Ireland contributes far less to the euro zone GDP). And Germany's industrial output increased 1.2%.
The French industrial goods sector may be booming (in relative terms) but there is only one stock in this category traded on US exchanges - Veolia Environnement S.A. (VE). We decided to search for other European industrial goods companies that present strong buying opportunities, and compare them to VE.
To create the list below, we began by looking for European stocks in the industrial goods sector traded on US exchanges, that are demonstrating high growth, with 5-year projected EPS growth above 20%.
Next we limited our results to those stocks that look undervalued relative to earnings growth, with PEG below 1. The PEG ratio is used to determine a stock's value while taking into account earnings growth. Similar to the PE ratio, a lower PEG means that the stock appears undervalued.
PEG = P/E / Annual EPS Growth
We were left with three companies on our list. Based on those results, we decided to look closer at Price to Earnings (P/E) and Forward Price to Earnings ratios.
Compared to VE, these companies had more attractive P/E ratios, as well as Forward P/E ratios below their P/E ratio, which would normally suggest that earnings are expected to grow in the near future. The Forward P/E for VE is also below its P/E, but that's not surprising considering the company's P/E ratio stands at 614.00.
Interactive chart: Average analyst ratings sourced from Zacks Investment Research.
&amp;amp;lt;p&amp;amp;gt;Your browser does not support iframes.&amp;amp;lt;/p&amp;amp;gt;
1. Siemens AG (SI, Earnings, Analysts, Financials): (Germany) An electronics and electrical engineering company, operates in the industry, energy, and healthcare sectors worldwide.Market cap at $94.27B, most recent closing price at $107.00 P/E: 13.44 Forward P/E: 10.99 PEG: 0.21 EPS over the next 5 years: 64.80% Returns since 5/13/13: 0.71%; compared to General Electric Company (GE) (3.19%) and Philips Electronics NV (PHG) (0.50%).
SI is partnering with Turkish steel pipe manufacturer Borusan Mannesmann, which is building a new Electric Resistance Welded pipe mill and accompanying heat treatment plant in Baytown, Texas. Designed to quench and temper oil country tubular goods, the new facility will rely on services from SI including engineering, delivering, installing, and commissioning for the heat treatment plant.
2. CRH plc (CRH, Earnings, Analysts, Financials): (Ireland) Engages in the manufacture and distribution of a range of building materials in the Republic of Ireland, Benelux counties, and the Americas.Market cap at $14.93B, most recent closing price at $20.44 P/E: 20.24 Forward P/E: 14.19 PEG: 0.93 EPS over the next 5 years: 21.80% Returns since 5/13/13: -3.17%; compared to Eagle Materials Inc. (EXP) (-4.13%) and CEMEX, S.A.B. de C.V. (CX) (-11.48%).
CRH is the largest company in Ireland, and The Motley Fool breaks down its management team to see what experience they bring to the table. Chairman Nicky Hartery moved up from the board of directors last year, and formerly worked for Dell's EMEA region as VP for manufacturing and business operations, as well as Verbatim as president and CEO. Read more here.
3. Chicago Bridge & Iron Company N.V. (CBI, Earnings, Analysts, Financials): (Netherlands) Provides engineering, procurement, and construction (EPC) solutions, as well as process technologies for the energy infrastructure projects.Market cap at $6.29B, most recent closing price at $58.78 P/E: 20.99 Forward P/E: 11.55 PEG: 0.97 EPS over the next 5 years: 21.63% Returns since 5/13/13: 2.49%; compared to Matrix Service Company (MTRX) (-2.16%) and EMCOR Group Inc. (EME) (-0.36%).
CBI is also active in the US market, and last month received a single-award indefinite delivery/indefinite quantity contract, worth $160M, from the US Environmental Protection Agency. This means CBI will provide environmental remediation services to the EPA's Region 9: Arizona, Nevada, California, Hawaii, tribal nations and U.S. territories in the Pacific Ocean.
&lt;p&gt;Your browser does not support iframes.&lt;/p&gt;
4. Veolia Environnement S.A. (VE, Earnings, Analysts, Financials): (France) Provides environmental management services to individuals, public authorities, and industrial and commercial services customers worldwide.Market cap at $6.41B, most recent closing price at $12.28 P/E: 614.00 Forward P/E: 18.89 PEG: N/A EPS over the next 5 years: N/A Returns since 5/13/13: -3.08%; compared to Waste Management, Inc. (WM) (-1.01%) and Waste Connections Inc. (WCN) (5.35%).
VE reported strong earnings growth over the last year, with EPS growing by 101.24%, higher than competitors like Republic Services, Inc. (RSG) (EPS growth over the last year at -0.42%) and WCN (EPS growth over the last year at -10.23%). While there is currently no data for the company's EPS over the next five years, its EPS growth this year is higher than all three companies profiled above: SI (-29.95%), CRH (-7.41%) and CBI (20.66%).
The company's most recent earnings report included declines in operating income and revenue, thanks in part to decreasing contributions from its Water, Environmental Services and Energy Services segments. Net operating income was down 1.5% in Q1 2013, at $519M, compared to $543.2M in Q1 2012. And total revenue came in at $7.37B, a drop of 3.9% compared to $7.91B in the first quarter of 2012.
&amp;lt;p&amp;gt;Your browser does not support iframes.&amp;lt;/p&amp;gt;
(Data sourced from Finviz. List compiled by Emily Smykal)
Use Kapitall's Tools: Looking for ways to analyze this list?Use this article snapshot as a launch pad (click here for help): Simply click on the links, and use Kapitall's tab navigation to browse through the data...
Analyze These Ideas: Getting StartedRead descriptions for all companies mentioned Access a performance overview for all stocks in the list Compare analyst ratings for the companies mentioned Compare analyst ratings to annual returns for stocks mentioned Real-Time Opinion: Scan the latest tweets about these companies (feed will open in a new window)
Dig Deeper: Access Company Snapshots, Charts, FilingsSiemens AG (SI, Chart, Download SEC Filings) CRH plc (CRH, Chart, Download SEC Filings) Chicago Bridge & Iron Company N.V. (CBI, Chart, Download SEC Filings) Veolia Environnement S.A. (VE, Chart, Download SEC Filings)
New to Kapitall?1. New to the site? Click here to register for a free account, and gain access to more tools and data2. Looking for more investing ideas like this? Click here to sign up for your free copy of Kapitall Weekly3. Follow us on SeekingAlpha, Motley Fool, Nasdaq and Twitter
ABOUT KAPITALL WIREKapitall Wire, which is not a broker/dealer, offers free cutting edge investing ideas, lively commentary and timely analysis of companies enhanced by interactive tools. And the Investing 101 section breaks complex concepts down to their basics, offering education to novices that doubles as a refresher course for more seasoned investors.Kapitall Wire is a division of Kapitall Inc. Securities products and services are offered by Kapitall Generation, LLC, member FINRA/SIPC . Kapitall Generation, LLC is a wholly owned subsidiary of Kapitall, Inc.