Value investors looking for bargains may be interested in the following three stocks, as their share prices are trading below the intrinsic value estimated by the GuruFocus Value Line.
The GF Value is the combination of the following three factors:
- The stock's historical multiples such as price-earnings (PE) ratio, price-sales (PS) ratio, price-book (PB) ratio and price-to-free-cash-flow (PFCF) ratio
- A GuruFocus adjustment factor based on past returns and growth of the company
- Analyst projections of future business performance
Mr. Cooper Group Inc
The first stock that matches the above criteria is Mr. Cooper Group Inc (COOP, Financial), a Coppell, Texas-based financial services company providing various services for single-family residences in the U.S.
Mr. Cooper Group Inc's share price was $23 at close on Monday. Mr. Cooper Group Inc' GF Value stands at $27.54. As a result, Mr. Cooper Group Inc's Price-to-GF-Value ratio is 0.84.
Therefore, based on the above relationship between the last close price and the GF Value, this stock is modestly undervalued.
The stock has a market capitalization of $2.09 billion after an 83.3% increase which occurred over the past year. The 52-week range is $4.31 to $25.59, the price-earnings ratio is 3.8 (versus the industry median of 10.62), the price-book ratio is 0.89 (versus the industry median of 0.8), the price-sales ratio is 0.86 (versus the industry median of 3.14) and the price-to-free-cash-flow ratio is 0.88 (versus the industry median of 6.42).
The stock has a GuruFocus profitability rating of 4 out of 10.
Concerning future business performance, sell-side analysts on Wall Street estimate that earnings per share will increase by almost 21% on average per annum over the next five years. Also, Wall Street recommends a buy rating with an average target price of $29.50 per share for the stock.
Encore Capital Group Inc
The second stock that meets the above criteria is Encore Capital Group Inc (ECPG, Financial), a San Diego, California-based financial services company providing debt recovery solutions services to several businesses worldwide.
Encore Capital Group Inc's share price was $31.45 at close on Monday, which compares to Encore Capital Group Inc' GF Value of $35.68 for a Price-to-GF-Value ratio of 0.88.
Therefore, based on the above relationship between the most recent close price and the GF Value, this stock is modestly undervalued.
The stock has a market capitalization of $985.79 million as a result of a 12.7% declined which occurred over the past year. The 52-week range is $15.27 to $49.01, the price-earnings ratio is 4.57 (versus the industry median of 10.62), the price-book ratio is 0.88 (versus the industry median of 0.8), the price-sales ratio is 0.68 (versus the industry median of 2.14) and the price-to-free-cash-flow ratio is 3.74 (compared to the industry median of 6.42).
The GuruFocus profitability rating for the stock is 8 out of 10.
With regard to future business performance, sell-side analysts on Wall Street predict that the earnings per share will increase by 13% on average per annum over the next five years. Also, Wall Street recommends an overweight rating with an average target price of $52 per share for the stock.
Regional Management Corp
The third stock that holds the above criteria is Regional Management Corp (RM, Financial), a Greer, South Carolina-based credit services company that provides various installment loan products mainly to customers who have limited access to the consumer credit.
Regional Management Corp's share price was trading at $26.51 at close on Monday. Regional Management Corp' GF Value stands at $36.82. Thus, Regional Management Corp's Price-to-GF-Value ratio is 0.74.
Based on the above comparison between the last close price and the GF Value, this stock is modestly undervalued.
The stock has a market capitalization of $304.48 million following a nearly 20% fall which was observed over the past year. The 52-week range is $10.33 to $33.95, the price-earnings ratio is 10.79 (versus the industry median of 11.89) and the price-book ratio is 1.11 (compared to the industry median of 0.76). Furthermore, the price-sales ratio is 0.89 (versus the industry median of 2.17) and the price-to-free-cash-flow ratio is 1.81 (compared to the industry median of 4.11).
The stock has a GuruFocus profitability rating of 5 out of 10.
Concerning future business performance, sell-side analysts on Wall Street estimate that earnings per share will increase by 24% on average every year over the next five years. Wall Street recommends an overweight rating with an average target price of $26 per share for the stock.
Disclosure: I have no position in any security mentioned.
Read more here:
- 3 Magic Formula Stock Picks for the Value Investor
- A Trio of Stocks Trading Below Intrinsic Value
- A Trio of Stock Picks for the 'Buy and Hold' Approach
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