When looking for bargain opportunities, value investors may want to consider the following securities, as their share prices are trading near or below the intrinsic value estimated by the GuruFocus Value Line. The GF Value is a unique intrinsic value calculation from GuruFocus that utilizes the three components listed below:
- The stock's historical multiples, such as the price-earnings ratio, the price-sales ratio, the price-book ratio and the price-to-free cash flow ratio.
- A GuruFocus adjustment factor based on the past returns and growth of the company's business.
- Analyst estimates of future business performance.
Canon Inc
The first stock investors may want to consider is Canon Inc. (CAJ, Financial), a Tokyo, Japan-based manufacturer and seller of office multifunction devices, plain paper copying machines, laser and inkjet printers. The company also makes cameras, diagnostic and lithography equipment.
Canon Inc's share price was $22.37 at close on Friday, while its GF Value stands at $24.64, resulting in a price-to-GF-Value ratio of 0.91 and a rating of fairly valued. The stock price is currently up 26% year-over-year, determining a market capitalization of $23.4 billion and a 52-week range of $17.36 to $25.94.
The price-earnings ratio is 12.83 (versus the industry median of 23.30) and the price-book ratio is 0.98 (versus the industry median of 2.16). Also, the price-sales ratio is 0.72 (versus the industry median of 1.41) and the price-to-free-cash-flow ratio is 7.82 (versus the industry median of 23.98).
The stock has a GuruFocus profitability rating of 7 out of 10.
Concerning the future business performance, sell-side analysts on Wall Street estimate that the earnings per share will increase by approximately 1% per annum over the next five years.
Mercury General Corp
The second stock investors may want to consider is Mercury General Corp (MCY, Financial), a Los Angeles, California-based seller of automobile insurance and homeowners' insurance products to consumers in several states in the U.S. The company reaches its clients either directly or through a network of independent agents and insurance agencies.
Mercury General Corp’s shares closed at $54.49 apiece on Friday while its GF Value is $60.72, resulting in a price-to-GF-Value ratio of 0.90 and a rating of modestly undervalued. Currently, the stock price is up 32.3% year-over-year for a market capitalization of $3.02 billion and a 52-week range of $40.11 to $67.88.
The price-earnings ratio is 6.01 (versus the industry median of 13) and the price-book ratio is 1.38 (versus the industry median of 1.42). The price-sales ratio is 0.74 (versus the industry median of 1.18) and the price-to-free-cash-flow ratio is 4.82 (versus the industry median of 7.11).
The GuruFocus profitability rating is 6 out of 10.
Regarding future business performance, sell-side analysts on Wall Street estimate that the earnings per share will increase by approximately 37.90% per annum over the next five years.
El Pollo Loco Holdings Inc
The third stock investors may want to consider is El Pollo Loco Holdings, Inc. (LOCO, Financial), a Costa Mesa, California-based operator of 475 company-owned and franchised restaurants in Arizona, California, Nevada, Texas, Utah and Louisiana.
El Pollo Loco Holdings Inc’s shares closed at $14.70 apiece on Friday while its GF Value was $16.49, resulting in a price-to-GF-Value ratio of 0.89 and a rating of modestly undervalued. The stock has risen by less than 1% over the past year, determining a market capitalization of $538.58 million and a 52-week range of $13.95 to $21.96.
The price-earnings ratio is 18.85 (compared to the industry median of 20.90) and the price-book ratio is 1.84 (versus the industry median of 2.63). The price-sales ratio is 1.18 (compared to the industry median of 0.90) and the price-to-free-cash-flow ratio is 12.37 (versus the industry median of 22.47).
GuruFocus has assigned the stock a profitability rating of 6 out of 10.
Concerning the future business performance, sell-side analysts on Wall Street predict that the earnings per share will increase 15% every year over the next five years.
