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3 Stocks Trading Below Earnings Power Value

These businesses appear fairly priced

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Dec 02, 2021
Summary
  • Customers Bancorp Inc, First Busey Corporation and G-III Apparel Group Ltd are trading below their earnings power values (EPV)
  • The EPV was designed by Bruce Greenwald, a former professor at Columbia University and a prominent value investor
  • It is calculated as the adjusted earnings divided by the weighted average cost of capital
  • It allows investors to bypass a series of guesswork choices that must be made when evaluating the intrinsic value of a stock through the discounted cash flow model
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When screening the market for stocks that are trading at or below their fair prices, one tool investors can use is the earnings power value (EPV).

The EPV was designed by Bruce Greenwald, a former professor at Columbia University and a well-known value investor. Greenwald was in search of ways to bypass the series of guesswork choices that must be made when trying to appraise the intrinsic value of a stock through the discounted cash flow valuation model. The EPV is calculated as the adjusted earnings divided by the weighted average cost of capital.

The stocks listed below seem reasonably priced as their share prices are trading lower than their respective EPVs.

Customers Bancorp Inc

The first stock that holds the criteria is Customers Bancorp Inc (

CUBI, Financial) a West Reading, Pennsylvania-based regional bank serving individual consumers and small and mid-tier market businesses.

Customers Bancorp's EPV is $64.68 per share (as of the Sept. 2021 quarter), which is above the share price of $56.68 as of the end of trading on Wednesday, for a margin safety of about 12.37%.

Due to a 218.61% jump in the share price which occurred over the past year, the market capitalization is $1.84 billion. The 52-week range is $17.32 to $61.48.

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

BlackRock Inc. and iShares Core S&P Small-Cap ETF are amid the largest top fund holders of the company with 14.55% and 6.09% of total shares outstanding, respectively.

First Busey Corporation

The second stock that holds the criteria is First Busey Corporation (

BUSE, Financial), a Champaign, Illinois-based regional bank providing retail and commercial banking products and services to private consumers, corporate and public organizations in the United States.

First Busey Corporation's EPV is $78.21 per share (as of the Sept. 2021 quarter), which is above the share price of $25.68 as of the end of regular trading hours on Wednesday, for a margin of safety of 67.17%.

Following a 23.76% increase in the share price that happened over the past year, the market capitalization now trades at $1.43 billion. The 52-week range is $20.51 to $28.60.

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GuruFocus has assigned a score of 3 out of 10 to the company's financial strength rating and 4 out of 10 to its profitability rating.

BlackRock Inc. and VANGUARD GROUP INC are among the largest top fund holders of the company with 7.18% and 4.82% of shares outstanding, respectively.

G-III Apparel Group Ltd

The third stock that holds the criteria is G-III Apparel Group Ltd (

GIII, Financial), a New York-based designer and marketer of apparel for men and women in the United States and internationally.

G-III Apparel Group Ltd.’s EPV is $44.17 per share (as of the July 2021 fiscal quarter), which is above the share price of $30.44 as of the end of regular hours on Wednesday, determining a margin of safety of about 31.08%.

After the share price has increased 34.16% over the past year, the market capitalization is approximately $1.48 billion. The 52-week range is $20.67 to $35.80.

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GuruFocus has assigned a score of 5 out of 10 to the company's financial strength rating and 7 out of 10 to its profitability rating.

BlackRock Inc., VANGUARD GROUP INC and FMR LLC are among the largest top fund holders of the company with 14.88%, 9.20% and 8.74% of shares outstanding, respectively.

Disclosures

I/we have no positions in any stocks mentioned, and have no plans to buy any new positions in the stocks mentioned within the next 72 hours. Click for the complete disclosure
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