Benzinga published a report highlighting three S&P 500 companies that have underperformed the broader market rally, which has seen the index rise by over 10% this year. The article identifies PayPal, Honeywell, and Comcast as stocks that have been left behind by the current market momentum.
PayPal (NASDAQ: PYPL) is described as a top laggard in the S&P 500. The company’s stock has slumped by over 78% in the last five years, while the index has soared by over 71%. The filing notes that the stock has fallen due to a slowdown in revenue and profitability. In the most recent results, revenue rose by 5% in the second quarter to $8.7 billion, with active customers remaining at 439 million. The company recently faced setbacks, including the decision by Stripe and Advent to end their pursuit of the firm. Despite these challenges, PayPal has a new CEO and is using its balance sheet to repurchase shares, with the average basic outstanding shares falling from over 1.15 billion in 2022 to 877 million today.
Honeywell (NASDAQ: HON) is also cited as a highly undervalued company. The stock has dropped by over 21.5% from its highest point this year, reaching its lowest level since January. The sell-off was exacerbated by President Donald Trump threatening to block the sale of Bombardier planes in the US, a significant customer for Honeywell. Additionally, the company reduced its forward guidance, now expecting sales to be between $19.8 billion and $20 billion, down from a prior range of $19.9 billion to $20.2 billion. These factors have lowered the company’s trailing twelve months price-to-earnings ratio to 11.
Comcast Corporation (NASDAQ: CMCSA) has also underperformed the market, slumping by 10% this year and 20% over the last 12 months. The company’s forward price-to-earnings ratio stands at 7.17, which is lower than the median for the communications sector. Comcast is focused on turning around its business, including spinning off its media business into Versant Media, which is valued at over $5 billion. Management is also working to improve its broadband business and boost the profitability of its Peacock streaming service. The company returned $2.1 billion to investors and generated over $4.6 billion in free cash flow. Analysts remain optimistic, with the average estimate for the stock being $32, which is up by 30% from the current level.
