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A Trio of Stocks With Low PEG Ratios

They look like bargain opportunities based on forward and 12-month metrics

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Oct 06, 2021
Summary
  • Adtalem Global Education, Textainer Group Holdings and Golden Entertainment appear to be underestimated by the market.
  • At 1.5 or less, their trailing 12-month and forward price-earnings to growth ratios have performed better than the S&P 500's historical average.
  • Wall Street sell-side analysts have also issued positive recommendation ratings for these stocks.
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When screening the market for bargain opportunities, investors may want to consider the three securities listed below, as they appear to be underestimated by the market. Their trailing 12-month and forward price-earnings to growth ratios are at or below 1.5 as of Oct. 5, which is the S&P 500's historical average PEG ratio.

The PEG ratio is calculated as the price-earnings ratio without non-recurring items divided by the five-year Ebitda growth rate. For financial stocks, the five-year book value growth rate is used instead.

The forward PEG ratio is calculated as the price-earnings ratio without NRI divided by the expected future earnings per share growth rate, which is a projection for the next five years based on analysts' estimates.

Wall Street has also issued positive recommendation ratings for these stocks, meaning that analysts expect shares to trade higher over the coming months.

Adtalem Global Education

The first company that makes the cut is Adtalem Global Education Inc. (

ATGE, Financial), a Chicago-based provider of educational services.

As of Oct. 5, Adtalem Global Education has a share price of $39.07, a price-earnings ratio of 19.83, a historical five-year Ebitda growth rate of 14.40% and an estimated future five-year earnings growth rate of 15%. Thus, the trailing 12-month PEG ratio is 1.38 and the forward PEG ratio is 1.32.

Since the share price has risen by 49.2% over the past year, the market capitalization now stands at $1.94 billion and the 52-week range is $23.22 to $43.85.

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GuruFocus assigned a score of 4 out of 10 for the company's financial strength and 7 out of 10 for its profitability.

On Wall Street, the stock has a median recommendation rating of overweight with an average target price of $46.80 per share.

Textainer Group Holdings

The second company that qualifies is Textainer Group Holdings Ltd. (

TGH, Financial), a Hamilton, Bermuda-based operator of approximately 2.4 million containers for a total of 3.8 million 20-foot equivalent units, serving shipping lines as well as freight forwarding companies and the U.S. military.

As of Oct. 5, Textainer Group Holdings has a share price of $35.30, a price-earnings ratio of 9.15, a historical five-year Ebitda growth rate of 8.90% and an estimated future five-year earnings growth rate of 12%. Thus, the trailing 12-month PEG ratio is 1.03 and the forward PEG ratio is 0.76.

After a 135.7% rise over the past year, the market capitalization is $1.75 billion and the 52-week range is $13.95 to $37.88.

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GuruFocus assigned a score of 3 out of 10 for the company's financial strength and 7 out of 10 for its profitability.

On Wall Street, the stock has a median recommendation rating of buy with an average target price of $41.50 per share.

Golden Entertainment

The third company that qualifies is Golden Entertainment Inc. (

GDEN, Financial), a Las Vegas-based owner of a diversified entertainment platform with 16,000 slots that operates in approximately 1,000 locations in the U.S.

As of Oct. 5, Golden Entertainment has a share price of $50.02, a price-earnings ratio of 18.53, a historical five-year Ebitda growth rate of 14.90% and an estimated future five-year earnings per share growth rate of 15%. Thus, the trailing 12-month PEG ratio is 1.24 and the forward PEG ratio is 1.24.

Following a 261% increase over the past year, the market capitalization is $1.44 billion and the 52-week range is $12.25 to $54.86.

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GuruFocus assigned a score of 3 out of 10 for the company's financial strength and 5 out of 10 for its profitability.

On Wall Street, the stock has a median recommendation rating of buy with an average target price of $61.50 per share.

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I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
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