Investors use the price/earnings ratio (P/E ratio) to determine the relative value of a stock. It's calculated by taking the current price of a stock and dividing it by the company's annualized earnings per share (EPS). It can also be calculated using a company's estimated EPS for the upcoming year (called the forward P/E ratio).

The P/E ratio is not a flawless method of determining a stock's value. Stocks with high P/E ratios can continue to climb in value, while low P/E stocks can lose value. However, it does provide investors an idea of whether a stock should be considered cheap or expensive.

While the P/E multiple can be helpful in determining which stocks look to be undervalued, stocks with low P/E ratios should be examined closely. Stocks could be trading at a low multiple due to weakness in the company's business cycle or slowing revenue and earnings growth.

As of Oct. 23, 2015, the Standard & Poor's 500 Index (S&P 500) had a forward P/E ratio of 15.86. However, dozens of S&P 500 stocks come in well below that benchmark.

Citigroup, Inc.

Citigroup (NYSE: C) is considered one of the largest banks in the world, with nearly $2 trillion in assets. The company continues to be involved in expensive litigation stemming from the 2008 financial crisis, which has resulted in billions of dollars in fines. Citigroup stock trades at a forward P/E of 9.30 as of Oct. 23, 2015.

Ford Motor Co.

Ford Motor Company (NYSE: F) is one of the biggest auto manufacturers in the United States. It is expected to sell over 2 million new vehicles in 2015. Ford stock trades at a forward P/E of 8.12 as of Oct. 23, 2015.

Apple, Inc.

Apple (NASDAQ: AAPL) is considered one of the largest companies in the world. It is known for products such as the iPad, the iPhone and the Apple Watch. Apple stock trades at a forward P/E of 12.15 as of Oct. 23, 2015.

Gilead Sciences, Inc.

Gilead Sciences (NASDAQ: GILD) is one of the world's largest biotechnology and pharmaceutical companies. It is known for producing drugs, such as Hespera and Tamiflu. It also launched Sovaldi and Harvoni – its drugs designed to combat hepatitis C – in 2014. Gilead Sciences stock trades at a forward P/E of 9.29 as of Oct. 23, 2015.

AT&T, Inc.

AT&T (NYSE: T) is a global telephone and television giant. Utility companies are generally considered conservative businesses due to the predictability and consistency of demand, which makes them popular stocks for income-seeking investors. AT&T stock trades at a forward P/E of 12.05 as of Oct. 23, 2015.

Morgan Stanley

Morgan Stanley (NYSE: MS) is also one of the world's biggest financial institutions. It offers financial advisory services to companies looking to engage in merger and acquisition (M&A) activity. The bank has struggled to grow revenues in 2015, so its stock is down almost 16% year to date as of Oct. 23, 2015. Morgan Stanley stock trades at a forward P/E of 10.23 as of Oct. 23, 2015.

Micron Technology, Inc.

Micron Technology (NASDAQ: MU) is a global producer of semiconductors and memory chips. The company has struggled with global weakness in personal computer demand. Year to date, the stock is down over 50% as of Oct. 23, 2015. Micron stock trades at a forward P/E of 7.43 as of Oct. 23, 2015.

Delta Air Lines, Inc.

Delta Air Lines (NYSE: DAL) is a global airline giant that operates nearly 5,000 flights per day to destinations around the globe. Delta Air Lines stock trades at a forward P/E of 8.93 as of Oct. 23, 2015.

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