We ran a screen to find undervalued European stocks trading on US exchanges by looking at the levered-free cash flow to enterprise value ratio (LFCF/EV).
The LFCF/EV ratio is essentially a ratio of the cash a company has on hand to an alternative measure of its size – the enterprise value. Enterprise value is similar to market capitalization, except it also takes into account a company's debt and liabilities.
Levered-free cash flow is the amount of money a business has on hand to pay dividends to grow the company. When this ratio is high, in this case above 10%, it means that a company is liquid relative to its size. Which means the stock might be undervalued.
We were left with seven undervalued stocks on our list.Click on the interactive chart below to see data over time. Do you see investment opportunities in European-based stocks? Use the list below as a starting point for your own analysis. 1. ACE Limited ( ACE): Provides a range of insurance and reinsurance products to insureds worldwide. Market cap at $32.23B, most recent closing price at $94.50. Levered free cash flow at $3.96B vs. enterprise value at $36.66B (implies a LFCF/EV ratio at 10.8%).
2. Etablissements Delhaize Freres et Cie Le Lion S.A. ( DEG): Operates food supermarkets in North America, Europe, and southeast Asia. Market cap at $6.06B, most recent closing price at $60.0. Levered free cash flow at $978.31M vs. enterprise value at $9.00B (implies a LFCF/EV ratio at 10.87%).
3. Eni SpA ( E): Engages in the exploration, production, transportation, transformation, and marketing of oil and natural gas. Market cap at $86.44B, most recent closing price at $47.72. Levered free cash flow at $20.92B vs. enterprise value at $105.01B (implies a LFCF/EV ratio at 19.92%).