Two of Australia's biggest companies are trading at multi-year lows.
The share price of leading integrated energy producer Origin Energy Ltd (ASX: ORG) has fallen a further 1.4% by mid-afternoon today and at one stage was down even more, touching a low of $4.90 – a level last seen around eleven years ago!
Meanwhile, Australia's largest supermarket operator Woolworths Limited (ASX: WOW) is trading slightly higher today after touching an intra-day low of $23.24 – a level last seen almost nine years ago!
At these price levels, long-term, value investors are bound to be getting interested (perhaps even a little excited!) however they will also be wary about whether they could be catching a falling knife…
With the share price of Origin and Woolworths having plunged 51% and 15% respectively over the past three months, it has certainly been a case of some nasty cuts for investors who have been game enough to step up and buy.
Based on analyst consensus data provided by Morningstar, Origin and Woolworths are both trading on price-to-earnings (PE) ratios of around 17 times financial year 2016 estimates.
Looking out to FY 2017 the PE multiple drops to 10 times for Origin however it remains roughly the same for Woolworths. This highlights the consensus view that Origin's earnings will snap-back in FY 2017, while Woolworths' earnings will remain subdued.
For long-term investors who are willing to disregard the market's "noise" surrounding these two stocks, with a potential baseline of earnings arguably in view, now could be the time to consider adding these leading stocks to your portfolio – these "knives" may not have too much further to fall.
