Wall Street's usually on the ball when assessing a company's true value, but it can sometimes forget that certain news is already baked into a stock's price. We saw one great example on Monday, when global infrastructure conglomerate SPX (NYSE:SPW) lowered its Q1 and full-year 2009 guidance, prompting shares to drop 18%. For Fools, the plunge could spell opportunity.

Until this week, investors expected 2009 earnings to land between $5.40 and $5.80 per share. But SPX management has just reduced that figure by a dollar per share at each end of the previous range. For the first quarter, the company expects to post earnings on the lower end of the $0.75-to-$0.85 range suggested a few weeks ago.

Now, double-digit guidance cuts are nothing to ignore, but I have to wonder why the market reacted with such apparent surprise. Moreover, I think investors haven't really looked at the numbers here.

Jumping to conclusions
For one thing, consensus Q1 income estimates already reflected low expectations. Even a full month ago, the average first-quarter outlook of $0.78 per share was indeed on the lower end of a $0.75 to $0.85 range. Nothing disruptive there.

So the bulk of Monday's sell-off must have stemmed from the diminished full-year view. Analysts had expected $5.11 before the announcement.

In that regard, yeah, maybe SPX deserved a slap on the wrist. But even if the company's full-year income comes in at the worst-case scenario of $4.40 per share, the shares are still a bargain compared to the company's peers.

Stack 'em up
Based on per-share earnings of $4.40 for 2009, SPX's forward-looking price-to-earnings ratio now stands right around 10. Take a look at the same metrics for some of the company's competitors.

Company

Recent Price

Estimated 2009 EPS

Forward P/E

SPX

$43.91

$4.40

10.0

Whirlpool (NYSE:WHR)

$34.47

$2.82

12.2

Lennox International (NYSE:LII)

$29.08

$2.08

14.0

Helen of Troy (NASDAQ:HELE)

$15.84

$1.37

11.6

And remember, $4.40 is on the low end of SPX's outlook. Better results could knock forward P/Es well below 10.

I think SPX's sharp dip will likely reverse itself in a hurry, once the market starts to crunch the same numbers. If the economy improves even marginally better than SPX expects, this stock could become one of the faster movers in the group.

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