The Earnings Power Value (EPV) metric helps investors to ascertain whether or not a stock is fairly priced by the market.
The creation of the EPV metric has been attributed to Bruce Greenwald, a professor at Columbia University and famous value investor, who was looking for ways to bypass the series of guesswork choices that are necessary when applying the discounted cash flow valuation model. The EPV is calculated as the adjusted earnings divided by the weighted average cost of capital.
Below are three stocks that seem to be fairly priced, as their share prices are trading below their respective EPVs.
BCB Bancorp Inc
The first stock that makes the cut is BCB Bancorp Inc (BCBP, Financial), a Bayonne, New Jersey-based holder of BCB Community Bank, a regional bank providing commercial banking products and services to households and companies.
BCB Bancorp Inc's EPV is $12.94 per share (as of June 29), which is higher compared to the share price of $8.26 at close on Tuesday for a margin of safety of 36.15%.
Following a 31% decline which occurred in the share price over the last 12 months of trading, the market capitalization is $140.89 million and the 52-week range is $7.87 to $14.50.
GuruFocus has assigned a score of 3 out of 10 to the company's financial strength and of 4 out of 10 to its profitability.
Wall Street sell-side analysts issued a hold recommendation rating with an average target price of $9.17 per share for the stock.
Michael Price leads the group of the company's top fund holders, owning 5.98% of shares outstanding.
Middlefield Banc Corp
The second stock that makes the cut is Middlefield Banc Corp (MBCN, Financial), a Middlefield, Ohio-based holder of the regional bank that supplies various commercial banking services to individuals and to small and medium-sized businesses in northeastern and central Ohio.
Middlefield Banc Corp's EPV of $18.39 per share (as of June 29) is higher compared to Tuesday's closing share price of $17.45, giving a margin of safety of 5.09%.
Due to a nearly 28% share price decline which took place over the last 12 months of trading, the market capitalization is now $111.30 million and the 52-week range is $12 to $28.80.
GuruFocus has assigned a score of 3 out of 10 to the company's financial strength rating and of 4 out of 10 to its profitability rating.
Wall Street sell-side analysts issued a hold recommendation rating for this stock and have established an average target price of $23 per share.
The company's top fund holder is Carnegie Capital Asset Management, LLC with 2.9% of shares outstanding, followed by Elizabeth Park Capital Advisors, Ltd. with 2.54% and Siena Capital Management, LLC with 2.04%.
Smart Sand Inc
The third stock that makes the cut is Smart Sand Inc (SND, Financial), a Woodlands, Texas-based provider of equipment and services to operators in the oil and gas industry.
Smart Sand Inc's EPV is $21.39 per share (as of June 29), which exceeds the share price of $1.64 at close on Tuesday, yielding a wide margin of safety of 92.33%.
As a result of a 36.4% share price decline we have observed over the past year, the market capitalization now trades at $68.92 million and the 52-week range is $0.55 to $3.31.
GuruFocus has assigned a score of 6 out of 10 to the financial strength rating and a score of 8 out of 10 to the profitability of the company.
Wall Street sell-side analysts issued two strong buy recommendation ratings, three buy recommendation ratings and four hold recommendation ratings for the stock with an average of $1.88 per share for the price target.
With 3.53% of shares outstanding, FMR LLC is the company's top fund holder, followed by Sprott Inc. with 2.38% and LSV ASSET MANAGEMENT with 1.60%.
Disclosure: I have no position in any security mentioned.
Read more here:
- 3 Stocks with High Return on Equity Ratios
- These Stocks Are Trading Below the Graham Number
- 3 Net-Net Working Capital Stocks for the Short-Term Investor
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