With these articles, I want to highlight all the companies that according to GuruFocus have a predictable business and are undervalued according to the Price/DCF (Average). I also apply another filter to those results to give you only the companies that have a significant EPS growth rate.
When a company is undervalued but earnings are growing, we can believe that sooner or later Mr. Market will take care of the price.
Related Articles:
Predictable and Undervalued Part I
Predictable and Undervalued Part II
Predictable and Undervalued Part III
Catamaran Corp (CTRX)
The company is a provider of pharmacy benefit management services PBM and healthcare IT solutions to the healthcare benefit management industry.
The stock has a business predictability of 5 stars and is currently trading at 40.60 of P/E +55.20% from its 52-week low and -0.44% from its 52-week high. Over the past 12 months, the price rose by 39%.
The Peter Lynch earnings line gives a fair value of $23.6, which means the stock is overpriced. The DCF calculator gives a fair value of $46.4 that puts the stock as overpriced by 32%.
During the last 5 years, EPS grew by 31.60% (35.70% during the last 10 years and 33.50% over the last 12 months), revenue grew by 57.10% and EBITDA by 44.10%.
Profitability and Growth is rated 8/10 and returns (ROE of 6.64%, a ROA of 3.74% and a ROC of 225.97%) are ranked higher than 52% of other companies in the Global Health Care Plans industry.
Jeremy Grantham (Trades, Portfolio) is the Guru holding the largest stake of CTRX with 3,314,869 shares (1.59% of shares outstanding, or 0.59% of total assets of its portfolio), followed by Manning & Napier Advisors, Inc with 1.06% of shares outstanding, and Wallace Weitz (Trades, Portfolio) with 0.57%.
Priceline Group Inc (PCLN)
The Company is a provider of online travel and travel related reservation and search services. The Company offer consumers accommodation reservations through its Booking.com, priceline.com and agoda.com brands.
The stock has a business predictability of 4.5 stars and is currently trading with a P/E ratio of 25. The price is +15.38% from its 52-week low and -14.05% from its 52-week high. Over the past 12 months, the price dropped by 9%.
The Peter Lynch earnings line gives a fair value of $686.3 that put the stock as overpriced while the DCF calculator gives the opposite result. It gives the stock a fair value of $1304.13 that put the stock as undervalued and with a margin of safety of 12% at current prices.
During the last 5 years, EPS grew by 39.70% (47.40% during the last 10 years and 22.20% over the last 12 months), revenue grew by 27.70% and EBITDA by 43.00%.
Profitability and Growth is rated 8/10 and returns (ROE of 29.59%, a ROA of 17.47% and a ROC of 1648.42%) are ranked higher than 92% of other companies in the Global Leisure industry.
The main competitors of PCLN are Six Flags Entertainment Corp (SIX), Carnival Corp (CCL), Royal Caribbean Cruises Ltd (RCL) and Cedar Fair LP (FUN). Compared to these companies, PCLN has the best growth rate for revenue and earnings over both the last 5 and 10 years. It has the highest net-margin at 28% and is even the one that is trading with the lowest P/E. By contrast, PCLN doesn’t pay a dividend, while all the other companies do. The company with the highest yield is Cedar Fair LP at 5.39%.
Frank Sands (Trades, Portfolio) is the guru holding the largest stake of PCLN with 1,389,674 shares (2.68% of shares outstanding, or 3.85% of total assets of its portfolio), followed by Steve Mandel (Trades, Portfolio) with 2.57%, and Chase Coleman (Trades, Portfolio) with 0.8%.
Macro Bank Inc (BMA)
The company provides standard banking products and services. The Bank provides its customers with standard products and services that is designed to suit individual needs.
The stock has a business predictability of 4.5 stars and is currently trading at 10.10 of P/E +60.72% from its 52-week low and -32.76% from its 52-week high. Over the past 12 months, the price rose by 14%.
The Peter Lynch earnings line gives a fair value of $101.00Â that put the stock as undervalued. The DCF calculator that gives a fair value of $189.68, giving the stock a margin of safety of 76% at current prices.
During the last 5 years, EPS grew by 35.80% (31.90% during the last 10 years and 7.80% over the last 12 months), revenue grew by 31.90% and EBITDA by 27.30%.
Profitability and Growth is rated 7/10 and returns (ROE of 31.11%, a ROA of 4.60% and a ROC of 1108.04%.) are ranked higher than 96% of other companies in the Global Banks - Regional - Latin America industry.
The only guru holding shares of BMA is Stanley Druckenmiller (Trades, Portfolio) who holds 0.19% of outstanding shares.
Lindsay Corp (LNN)
The company manufactures automated agricultural irrigation systems and sells these products in both U.S. and international markets. Through the acquisition of Watertronics in January of 2008, the Company has enhanced its position in water pumping station controls with further opportunities for integration with irrigation control systems.
The stock has a business predictability of 4.5 stars and is currently trading at 26.20 of P/E +20.49% from its 52-week low and -4.31% from its 52-week high. Over the past 12 months, the price rose by 3%.
The Peter Lynch earnings line gives a fair value of $51.8 that put the stock as overpriced. However, the DCF model gives a fair value of $95.65 that puts the stock as undervalued and with a margin of safety of 8% at current prices.
During the last 5 years, EPS grew by 31.60% (23.60% during the last 10 years but -14.30%Â over the last 12 months), revenue grew by 15.00% and EBITDA by 24.90%.
Profitability and Growth is rated 8/10 and returns (ROE of 11.44%, a ROA of 7.47% and a ROC of 38.03%) are ranked higher than 72% of other companies in the Global Farm & Construction Equipment industry.
The main competitors of LNN are Caterpillar Inc (CAT), Deere & Co (DE), Komatsu Ltd (KMTUY). Compared to the previous companies, LNN has the best earnings and revenue growth rate (related to both 10-Years, 5-Years and 1-Year), but it has the lowest net-margin. It is also trading with the highest P/E ratio.
Chuck Royce (Trades, Portfolio) is the guru holding the largest stake of LNN with 790,282 shares (6.91% of shares outstanding, or 0.23% of total assets of its portfolio), followed by Joel Greenblatt (Trades, Portfolio) who holds 2% of outstanding shares, and Mario Gabelli (Trades, Portfolio) who holds 0.57% of shares outstanding.
