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A Trio of Stocks Trading Below the Peter Lynch Earnings Line

These companies appear to be undervalued

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Dec 03, 2021
Summary
  • Steel Dynamics Inc., Western Alliance Bancorp and Service Corp International are trading below their respective Peter Lynch earnings lines.
  • These companies could be value opportunities.
  • Wall Street also likes these stocks.
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Value investors could be interested in the following stocks, since their share prices are trading below their respective Peter Lynch earnings lines. This indicates they could be underestimated by the market.

On Wall Street, these stocks have also received positive ratings from sell-side analysts.

Steel Dynamics Inc

The first stock investors could be interested in is Steel Dynamics Inc (

STLD, Financial), a Fort Wayne, Indiana-based steel producer and metal recycler with operating activities in the U.S.

The chart below illustrates that the share price ($59.60 at close on Dec. 2) is currently trading below the intrinsic value estimate of $166.35 calculated by the Peter Lynch earnings line.

1466775176254550016.png

The stock has grown 53.45% over the past year through Thursday for a market capitalization of $11.83 billion and a 52-week range of $33.77 to $74.37.

The stock has a median recommendation rating of overweight on Wall Street and an average target price of $80.88. This reflects a nearly 35.7% upside compared to Thursday’s closing price.

GuruFocus has assigned a score of 6 out of 10 to the company's financial strength and 7 out of 10 to its profitability.

BlackRock Inc. is the largest fund holder of the company with 12.62% of shares outstanding. The investment firm is followed by VANGUARD GROUP INC with 10.69% and FMR LLC with 4.36%.

Western Alliance Bancorp

The second stock investors could be interested in is Western Alliance Bancorp (

WAL, Financial), a Phoenix, Arizona-based regional bank focusing on banking products and related services.

The chart below shows that the share price ($111.51 as of Dec. 2) is currently trading below the Peter Lynch earnings line's intrinsic value estimate of $124.20.

1466775183883988992.png

The stock has risen by 100% over the past year through Thursday, determining a market capitalization of $11.62 billion and a 52-week range of $53.43 to $124.88.

Wall Street sell-side analysts have issued a median recommendation rating of buy for this stock with an average target price of $145.15, which reflects a 30.2% upside from Thursday’s closing price.

GuruFocus has assigned a score of 3 out of 10 to the company's financial strength and 6 out of 10 to its profitability.

PRICE T ROWE ASSOCIATES INC /MD/ is the largest top fund holder of the company with 12.12% of total shares outstanding. VANGUARD GROUP INC and Capital International Investors follow with 8.57% and 5.53%, respectively.

Service Corp International

The third stock investors could be interested in is Service Corp International (

SCI, Financial), a Houston, Texas-based provider of funeral products and services in North America.

The chart below shows the share price ($67.39 at close on Dec. 2) is trading below the Peter Lynch earnings line's intrinsic value estimate of $69.30.

1466775190125113344.png

The stock has grown by 35.9% over the past year through Thursday for a market capitalization of $11.11 billion and a 52-week range of $45.63 to $70.03.

The stock has a median recommendation rating of buy on Wall Street with an average target price of $74.25 per share, which reflects a 10.2% upside from Thursday’s closing price.

GuruFocus has assigned a score of 3 out of 10 to the financial strength and 8 out of 10 to the profitability of the company.

Baillie Gifford (Trades, Portfolio) is the largest top fund holder of the company, holding 10.76% of total shares outstanding. VANGUARD GROUP INC and BlackRock Inc. follow with 9.85% and 9.49%, respectively.

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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.
The views of this author are solely their own opinion and are not endorsed or guaranteed by GuruFocus.com
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