When screening the market for bargains, investors may want to consider the following three companies, as their stocks have low price-to-median-price-sales values when compared to the average of the S&P 500 (which stands around 1.7 as of the writing of this article).
This approach is based on the idea that the stock valuation will revert to its historical (10-year) average in terms of the price-sales ratio. It requires investors to divide the current share price by the trailing twelve-month revenue per share times the 10-year median price-sales ratio.
Wall Street is also positive about these stocks, as sell-side analysts have issued optimistic recommendation ratings for them.
Textron Inc
The first stock investors may want to consider is Textron Inc (TXT, Financial), a Providence, Rhode Island-based aircraft and defense operator.
Textron Inc's price-to-median-price-sales value is 1.57 as of May 14, which ranks higher than 48 out of 151 companies that operate in the aerospace and defense industry.
The company's revenue per share for the trailing 12 months ended in March 2021 was $51.355. Textron Inc has a 10-year median price-sales ratio of 0.841. Thus, the median price-sales value is $43.19 as of May 14.
The stock was trading at $67.99 per share at close on Friday for a market capitalization of $15.35 billion and a 52-week range of $23.32 to $69.16.
Currently, Textron Inc pays a quarterly dividend of 2 cents per common share with the next payment to be made on July 1. The stock grants a forward dividend yield of 0.12% as of May 14.
GuruFocus assigned a score of 5 out of 10 to the company's financial strength and 6 out of 10 to its profitability.
Wall Street recommends a median rating of overweight with an average target price of $69.43 per share for the stock.
Crown Holdings Inc
The second stock investors may want to consider is Crown Holdings Inc (CCK, Financial), a Yardley, Pennsylvania-based designer, manufacturer and seller of packaging products and equipment for consumer goods and industrial products in the U.S. and internationally.
Crown Holdings Inc's price-to-median-price-sales value is 1.67 as of May 14, which ranks higher than 37 out of 156 companies that operate in the packaging and containers industry.
The revenue per share for the trailing 12 months ended in March 2021 was $88.482. Crown Holdings Inc has a 10-year median price-sales ratio of 0.758. Thus, its median price-sales value is $67.07 as of May 14.
The stock was trading at $111.69 per share at close on Friday for a market capitalization of $15.07 billion and a 52-week range of $58.10 to $114.55.
Currently, Crown Holdings Inc pays a quarterly dividend of 20 cents per common share with the next payment to be issued on May 20. The stock grants a forward dividend yield of 0.72% as of May 14.
GuruFocus assigned a score of 4 out of 10 to the company's financial strength and 8 out of 10 to its profitability.
Wall Street recommends a median rating of overweight for the stock with an average target price of $127.15 per share.
Fortune Brands Home & Security Inc
The third stock investors may want to consider is Fortune Brands Home & Security Inc (FBHS, Financial), a Deerfield, Illinois-based provider of products for residential home repair, remodeling and new construction.
Fortune Brands Home & Security Inc's price-to-median-price-sales value is 1.27 as of May 14, which ranks higher than 65 out of 163 companies that operate in the furnishing, fixtures and appliances industry.
The revenue per share for the trailing 12 months ended in March 2021 was $46.05. Fortune Brands Home & Security Inc has a 10-year median price-sales ratio of about 1.8391. Therefore, the median price-sales value is $84.70 as of May 14.
The stock price was trading at $107.95 per share on Friday for a market capitalization of $14.96 billion and a 52-week range of $50.57 to $114.005.
Currently, Fortune Brands Home & Security Inc pays a quarterly dividend of 26 cents per common share with the next payment scheduled for June 16. The stock grants a forward dividend yield of 0.96% as of May 14.
GuruFocus assigned a score of 5 out of 10 to the company's financial strength and 8 out of 10 to its profitability.
Wall Street recommends a median rating of overweight with an average target price of $117.15 per share for the stock.
Disclosure: I have no position in any securities mentioned.
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