These stocks are looking mighty cheap going into earnings season

US Top News and Analysis

The third-quarter earnings season is set to kick off this week, with certain stocks trading at attractive valuations. Delta Air Lines, Infosys and Domino’s Pizza are some of the big names scheduled to report earnings Thursday. Friday kicks off earnings for the financial sector, with JPMorgan Chase, Citigroup, Blackrock, PNC Financial Services and Wells Fargo all slated to post their results. Going into earnings, 76 companies in the S & P 500 have already issued negative earnings per share guidance for the third quarter, compared to 42 companies that have announced positive earnings per share guidance, FactSet data shows. Looking overall at the broad market index, earnings for the quarter are forecast to have fallen 0.4% from the year-earlier period, according to FactSet. This would mark the fourth consecutive quarter of year-over-year earnings declines for companies in the broad market index. With this in mind, CNBC Pro screened for stocks with growing earnings that are also trading at a discount. The stocks on the list all met the following criteria: Cheap: The current P/E ratio is at a discount of 20% or greater to its average P/E over the past five years. Growing earnings: Earnings per share have grown more than 20% over the past 12 months. Liked by analysts: The consensus rating is a buy, with consensus price targets calling for an increase of 20% or more. Take a look at the stocks on the list and where analysts see them headed next. Major U.S. airlines Delta and United Airlines both made the list. The two airlines are trading at the largest discounts on the list at 87.7% and 89.8%, respectively. Delta earnings are up a whopping 370.7% over the past 12 months. Analysts on average also expect shares to rally 57% going forward. The stock is up more than 9% this year but is lagging behind the S & P 500’s year-to-date gains. Oil producer Devon Energy is also trading at a deep discount of more than 72%. The company’s trailing 12 months P/E ratio is 6.3, significantly lower than the five-year average P/E of 22.61. Analysts estimate shares rallying 31.1% from Monday’s close. Shares are down 24.9% year to date. The stock has jumped more than 6% since Monday due to concerns of oil supply tightening following the outbreak of the Israel-Hamas war. Devon Energy is slated to release its earnings Nov. 7. DVN 5D mountain Devon Energy shares Semiconductor giant Qualcomm is also trading cheap ahead of its earnings announcement. Shares are trading at a 30.4% discount, with analysts estimating more than 22% upside from Monday’s close. Earnings per share have also grown 45.1% over the past 12 months. The stock is up a little over 2% for the year. The company will be releasing its quarterly results the first day of November. — CNBC’s Michael Bloom contributed to this report. Correction: This story has been updated to remove an incorrect characterization of Domino’s Pizza’s stock.