Due to sharp declines in their respective share prices, a number of shares are changing hands at significant discounts to the market average of 17x earnings.
Should you snap up these beaten down shares? They are as follows:
Greencross Limited (ASX: GXL)
Year-to-date this integrated pet care company's shares have shed 17% of their value after getting caught up in the retail sell-off due to weak trading conditions and Amazon's impending Australian launch. Based on its FY 2018 guidance, this has left its shares trading at just 14x estimated forward earnings. I think this is great value considering its market-leading position in the pet care industry, especially given management's belief that it can continue to grow even if Amazon does launch.
iSentia Group Ltd (ASX: ISD)
Yesterday this media monitoring company's shares plunged a whopping 41% following the release of another disappointing trading update. While this has led to its shares changing hands at just over 10x estimated forward earnings, I'm not confident that iSentia will return to growth again in FY 2019. The company's core business continues to suffer from high levels of customer churn and I don't expect this to be an easy fix. This could arguably make its shares a value trap today.
Telstra Corporation Ltd (ASX: TLS)
The prospect of weaker-than-expected NBN margins, a $3 billion future gap in its earnings, and a dividend cut have all weighed heavily on Telstra's shares over the last 12 months. While there have been questions about whether Telstra will be able to maintain its 22 cents per share dividend, I am optimistic that there are enough emerging opportunities in the mobile data space that will allow it to do so. So with all the negative news flow out of the way now, I think it could be a great time to snap up shares.
