From my watch list, I take these three companies undervalued based on Peter Lynch Price Value.
1) Aflac Inc (AFL)
Description: AFL has a market cap of $25,719 M, and it is a general business holding company and acts as a management company, overseeing the operations of its subsidiaries by providing management services and making capital available. The company and its subsidiaries mainly sell supplemental health and life insurance in the United States and Japan.
Profitability: AFL is part of the Global Insurance –Â Lifesector and it has a Profitability of 8/10. The company has a ROE of 17%, a ROA of 2% and a ROC of 1121%. These ratios are better then 95% of other companies of the same sector even if there numbers are not the best the company ever had during its history.
Financials: The company has a financial strength of 7 out of 10, with a Cash to Debt ratio of 0.59 and an Interest Coverage of 16.44
Growth: Over the last five years, the company had a steady and strong growth rate (per share).
| Revenue | +8% |
| EBITDA | +20% |
| BookValue | +16% |
| EPS | +18% |
Price: The stock is trading at about $61 at almost the same price of 12 months back. The Peter Lynch value gives a price of $112. The stock is undervalued more than 40%. The DCF model gives a fair value of $100 with a margin of safety of 39%.
The price is facing a downward trend that started on January 2014. This trend is not strong, and since that time the price dropped of just 10%.
At the price of 68$ there is a very important resistance that has been tested 2 times (in 2008 and 2013) that so far worked well and the price always bounced back from it.
The price is down 7% from its 52-week high and is up 11% from its 52-week low. The P/E ratio is 9.90 and compared to industry and to history of the company it is near the all-time low.
Dividend Yeld: AFL has a dividend yield of 2.45% with a growth rate of of 6% on the last 5 years
Gurus: On the last quarter of 2014, Gurus thought about buying or increasing their positions in AFL.
Bill Nygren added 31% to his portfolio, Jim Simons added 100%, Ray Dalio added 175%, Paul Tudor Jones added 29% and Joel Greenblatt bought this stock for the first time. Since that quarter the price rose just 1%.
The guru who holds the most shares of AFL is Bill Nygren with 1.04% of Outstanding Shares
2) AGCO Corp (AGCO)
Description: AGCO has a market cap of $3,986 M manufactures and distributes of agricultural equipment and related replacement parts in various parts of the country. It sells a full range of agricultural equipment, including tractors, combines, self-propelled sprayers, hay tools, forage equipment, tillage, implements and grain storage and protein production systems.
Profitability:Â AGCO ratios are better then 80% of Global Farm & Construction Equipment competitors. The company has a global profitability of 7/10 based on GuruFocus studies.
Financials:Â The company has a financial strength of 7 out of 10, with Cash to Debt of 0.23 and Interest Coverage of 11.15.
Growth:Â Over the last five years, the company had a steady growth rate (per share).
| Revenue | +13% |
| EBITDA | +33% |
| BookValue | +12% |
| EPS | +44% |
Price:Â The stock is trading at about $50 at the same price of 12 months back. The Peter Lynch value gives a price of 122$. The stock is undervalued of 60%. The DCF value gives a price of 72 $ with a margin of safety of 32%. Based on GuruFocus Checklist, the price we get after 21 votes is 68$
Currently, the price is facing a downward trend that started on October 2013 and since that time the price dropped 24% putting his trading level down 17% from its 52-week high and up 17% from its 52-week low.
Dividend Yeld:Â AGCO has a small dividend yeld of 0.90% that was not released from 2001 to 2013.
Gurus: On 2014 Q4 AGCO was bought by 8 gurus. Most weighted trades are by FPA Capital Fund that added 87% to its position with an impact of 1.26% on its portfolio; Richard Snow that bought AGCO with an impact of 2.1% on his portfolio; Chuck Royce that added 106% to his portfolio; Third Avenue Management that added 66% to its portfolio with a total impact of 0.64%.
Third Avenue Management is top Guru that holds 1.82% of outstanding shares of AGCO, followed by Richard Snow (1.44%) and Martin Whitman (1.20%)
3) World Acceptance Corp (WRLD)
Description: World Acceptance Corporation has a market cap of 695 $M. It is a small-loan consumer finance company, that provides short-term small loans, medium-term larger loans, related credit insurance products and ancillary products and services to individuals.
Profitability:Â WRLD has profitability of 9 out of 10 with the best returns of the “Global Credit Services.” A ROC of 28%, a Return on Equity of 33% and a Return on Assets of 11%. ROC is at the lowest level of the history, while other ratios are on top of the sector and at the better level the company ever had.
Financials: The company has a financial situation not so healthy. Cash To Debt of 0.03 and Interest Coverage of 8.03. These levels are on average with the sector
Growth: Over the last five years, the company had an amazing growth rate (per share).
| Revenue | +19% |
| EBITDA | +17% |
| BookValue | +6% |
| Free Cash Flow | +17% |
Price: The stock is trading at about $80 and it dropped 20% on the last 12 months. The Peter Lynch value gives a price of $179 so the stock is undervalued by about 50% The DCF value gives a fair value of $279 with a margin of safety of 72%. Gurufocus members gave a Fair Value of $178 based on 15 votes.
Currently, the price has a downward trend that lasts since the month of February 2014. This trend dropped the price of 24%, putting it 24% down from its 52-week high and 23% up from its 52-week low.
Gurus : On Q4 of 2014, WRLD has been traded by Jim Simons (Trades, Portfolio) that increased his position of 33% and Paul Tudor Jones (Trades, Portfolio) that increased his position of 28%.
The Guru that holds the largest number of shares of WRLD is Columbia Wanger (Trades, Portfolio), holding 11.75% of outstanding shares
Summarizing the 3 stocks
| Â | AFL | AGCO | WRLD |
| ROC | 1121% | 21% | 28% |
| ROA | 2% | 5% | 11% |
| ROE | 17% | 10% | 33% |
| Compared to Industry (better then) | 95% | 80% | 96% |
| Â | Â | Â | Â |
| Cash to Debt | 0.59 | 0.23 | 0.03 |
| Â | Â | Â | Â |
| Revenue Growth (5y) | 8% | 13% | 19% |
| EBITDA Growth (5y) | 20% | 33% | 17% |
| BookValue Growth (5y) | 18% | 12% | 6% |
| Â | Â | Â | Â |
| Current Price | 61$ | 50$ | 80$ |
| Peter-Lynch Price | 112$ (+83%) | 122$ (+144%) | 179$(+123%) |
| DCF Price | 100$ (+39%) | 72$ (+44%) | 279$(+248%) |
| 52-Weeks High | -7% | -17% | -24% |
| 52-Weeks Low | +11% | +17% | +23% |
| P/E | 9.90 | Â | Â |
| Trend | Downward | Downward | Downward |
| Â | Â | Â | Â |
| Dividend Yeld | 2.45% | 0.90% | n/a |
AFL and AGCO have better balance sheet and a good margin of safety based on DCF and P-Lynch values. Is worth to keep an eye even on WRLD. The price dropped much along with some financial ratios, this is why the main value of the company is still safe and with good prospective.
Read more about me at an my trades at The Extra Income
