1. How to use GuruFocus - Tutorials
  2. What Is in the GuruFocus Premium Membership?
  3. A DIY Guide on How to Invest Using Guru Strategies
Alberto Abaterusso
Alberto Abaterusso
Articles (2333) 

3 Stocks With Low Price-Sales Ratios

These profitable businesses have robust financial conditions

October 01, 2020 | About:

Value investors may want to consider the following securities, as they have low price-sales ratios, high profitability and robust financial conditions. These three aspects result in a great likelihood that these securities could be value opportunities.

Big Lots Inc

The first company investors may want to consider is Big Lots Inc (NYSE:BIG), a Columbus, Ohio-based owner and operator of a discount stores in the U.S.

The stock traded at a price of $44.60 per share at close on Sept. 30 for a price-sales ratio of 0.3, which appeals more than the industry median of 0.42 and the S&P 500's price-sales ratio of 2.39.

Big Lots Inc has a GuruFocus profitability rating of 6 out of 10, driven by an operating margin of 5.8% (versus the industry median of 2.8%) and a net margin of 12.3% (versus the industry median of 1.5%). The return on equity (ROE) ratio is 80.9% (versus the industry median of 6.9%) and the return on total assets (ROA) ratio is 20.9% (versus the industry median of 2.57%). Furthermore, the return on capital (ROC) ratio (as defined by Joel Greenblatt) is 40.6% (versus the industry median of 10.3%).

The company has received a high GuruFocus financial strength rating of 8 out of 10. The rating is driven by a debt-to-Ebitda ratio of 1.54 (compared to the industry median of 3.44) and an interest coverage ratio of 23.44 (compared to the industry median of 7.69).

After a 102% increase over the past year, the stock has a market capitalization of $1.75 billion and a 52-week range of $10.13 to $57.24.

Wall Street sell-side analysts recommend an overweight rating for this stock and have established an average target price of $56.38 per share.

Renewable Energy Group Inc

The second company value investors may want to consider is Renewable Energy Group Inc (NASDAQ:REGI), an Ames, Iowa-based global producer, purchaser and (re)seller of biomass-based diesel, petroleum-based diesel and renewable identification numbers.

The stock traded at a price of $53.42 per share at close on Sept. 30 for a price-sales ratio of 0.92, which is less compelling than the industry median of 0.64 but still substantially below the S&P 500's price-sales ratio of 2.39.

Renewable Energy Group Inc has a GuruFocus profitability rating of 7 out of 10, driven by an operating margin of 22.1% (versus the industry median of 1.2%) and a net margin of 21.5% (versus the industry median of -5.2%). The ROE ratio is 58.9% (versus the industry median of -6.6%), the ROA ratio is 38.9% (versus the industry median of -4.3%) and the ROC ratio (as defined by Joel Greenblatt) is 58.3% (versus the industry median of -3.9%).

Furthermore, the three-year Ebitda growth rate is 55.8% (versus the industry median of 7.9%) and the three-year earnings per share (EPS) without non-recurring items (NRI) growth rate is 81% (versus the industry median of 11%).

The company has received a high GuruFocus financial strength rating of 8 out of 10, driven by an equity-to-asset ratio of 0.78 (versus the industry median of 0.45), and a debt-to-Ebitda ratio of 0.17 (versus the industry median of 3.51).

The interest coverage ratio is 73.56 (versus the industry median of 4.1), the Piotroski F-Score is 7 out of 9 and the Altman Z-Score is 8.2 (greater than 2.99), indicating a strong balance sheet.

The return on invested capital (ROIC) ratio is 54.1%, which is 6.13 times the weighted average cost of capital (WACC) of 8.83%, indicating overall profitability.

Following a nearly 272% increase over the past year, the stock now trades at a market capitalization of $2.1 billion, while the 52-week range is $13.67 to $54.74.

Wall Street sell-side analysts recommend a buy rating for this stock and have produced an average target price of $57.43 per share.

Flexible Solutions International Inc

The third stock investors may want to consider is Flexible Solutions International Inc (FSI), a Canadian global marketer of specialty chemicals that are used to slow the evaporation of water.

The stock traded at a price of $2.04 per share at close on Sept. 30 for a price-sales ratio of 0.88, which is more compelling than the industry median of 1.17 and the S&P 500 price-sales ratio of 2.39.

Flexible Solutions International Inc has a positive GuruFocus profitability rating of 7 out of 10, driven by a net margin of 11.7% (versus the industry median of 4.7%) and a ROE ratio of 17.9% (versus the industry median of 6.5%). The ROA ratio is 10% (versus the industry median of 3.5%), the ROC ratio (as defined by Joel Greenblatt) is 27.6% (versus the industry median of 10.4%) and the three-year revenue growth rate is 17.6% (versus the industry median of 5.2%).

The company has a GuruFocus financial strength rating of 7 out of 10, driven by a debt-to-Ebitda ratio of 1.31 (versus the industry median of 2.5), a Piotroski F-Score of 6 out of 9 and an Altman Z-Score of 3.3 (greater than 2.99), indicating high financial stability.

Furthermore, the return on invested capital (ROIC) of 13% exceeds the weighted average cost of capital (WACC) of 10.2%, indicating efficient employment of capital.

Over the past year, the share price has declined 13.5%, pushing the stock down to a market cap of $24.97 million, while the 52-week range is $0.86 to $3.15.

One sell-side analyst on Wall Street recommends a buy rating for this stock and has established a target price of $3.50 per share.

Disclosure: I have no positions in any securities mentioned in this article.

Read more here:

Not a Premium Member of GuruFocus? Sign up for a free 7-day trial here.

About the author:

Alberto Abaterusso
I am a contributor at GuruFocus. I primarily write about gold, silver and precious metals mining industries. My articles have also been widely linked by popular sites, including MarketWatch, Financial Times, 24hGold, Investopedia, Financial.org, CNBS, MSN Money, Zachs, Reuters and others. I hold a Master's Degree in Business Administration from Università degli Studi di Bari (Italy), Aldo Moro. I am based in The Netherlands.

You can follow me on Twitter at https://twitter.com/AAbaterusso

Rating: 0.0/5 (0 votes)

Comments

Please leave your comment:



Performances of the stocks mentioned by Alberto Abaterusso


User Generated Screeners


pjmason14Momentum
pascal.van.garsseHigh FCF-M2
kosalmmuse6
kosalmmuseBest one1
DBrizanall 2019Feb26
kosalmmuseBest one
DBrizanall 2019Feb25
kosalmmuseNice
kosalmmusehan
MsDale*52-Week Low
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)