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Zacks.com featured highlights include MarineMax, AdvanSix, USA Truck, Greif, and Plains GP Holdings
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For Immediate Release
Chicago, IL – March 17, 2022 – Stocks in this week’s article are MarineMax, Inc. (HZO - Free Report) , AdvanSix Inc.(ASIX - Free Report) , USA Truck, Inc., Greif, Inc.(GEF - Free Report) and Plains GP Holdings, L.P.(PAGP - Free Report) .
Tap These 5 Bargain Stocks with Amazingly Low EV-to-EBITDA Ratios
Investors generally have a fixation on the price-to-earnings (P/E) multiple while seeking stocks that are trading at a bargain. A widely favored approach by value investors is to chase stocks that have a low P/E ratio. However, even this widely popular valuation metric is not without its pitfalls.
While P/E is hands down the most widely used equity valuation ratio in the market, a relatively less used metric called EV-to-EBITDA is often viewed as a better option as it offers a clearer picture of a company's valuation and earnings potential. Unlike P/E. which solely considers a company's equity portion, EV-to-EBITDA determines its total value.
MarineMax, Inc., AdvanSix Inc., USA Truck, Inc., Greif, Inc., and Plains GP Holdings, L.P. are some stocks with impressive EV-to-EBITDA ratios.
EV/EBITDA is a Better Approach, Here's Why
Also referred to as the enterprise multiple, EV-to-EBITDA is the enterprise value (EV) of a stock divided by its earnings before interest, taxes, depreciation and amortization (EBITDA). EV is the sum of a company's market capitalization, its debt and preferred stock minus cash and cash equivalents.
EBITDA, the other element, gives a better idea of a company's profitability as it removes the impact of non-cash expenses like depreciation and amortization that reduce net earnings. It is also often used as a proxy for cash flows.
Just like P/E, the lower the EV-to-EBITDA ratio, the more appealing it is. A low EV-to-EBITDA ratio could be a sign that a stock is potentially undervalued.
EV-to-EBITDA takes into account the debt on a company's balance sheet that the P/E ratio does not. Due to this reason, EV-to-EBITDA is generally used to value the potential acquisition targets as it shows the amount of debt the acquirer has to assume. Stocks boasting a low EV-to-EBITDA multiple could be seen as attractive takeover candidates.
Another key downside of P/E is that it can't be used to value a loss-making entity. Moreover, a company's earnings are also subject to accounting estimates and management manipulation. On the other hand, EV-to-EBITDA is difficult to manipulate and can also be used to value companies incurring losses but are EBITDA-positive.
EV-to-EBITDA is also a useful yardstick in evaluating the value of firms that are highly leveraged and have a high degree of depreciation. Moreover, it can be used to compare companies with different levels of debt.
However, EV-to-EBITDA is not devoid of shortcomings and it alone can't conclusively determine a stock's inherent potential and future performance. The multiple varies across industries and is usually not appropriate while comparing stocks in different industries given their diverse capital expenditure requirements.
As such, a strategy solely based on EV-to-EBITDA might not yield the desired results. But you can club it with the other major ratios in your stock-investing toolbox such as price-to-book (P/B), P/E and price-to-sales (P/S) to screen bargain stocks.
Here are our five picks out of the 19 stocks that passed the screen:
MarineMax is a leading recreational boat and yacht retailer. This Zacks Rank #1 stock has a Value Score of A.
MarineMax has an expected year-over-year earnings growth rate of 16.2% for the current fiscal year. The Zacks Consensus Estimate for HZO's current fiscal year earnings has been revised 6.1% upward over the last 60 days.
AdvanSix is a manufacturer of nylon 6 resin, chemical intermediates and ammonium sulfate fertilizer. This Zacks Rank #1 stock has a Value Score of A. You can see the complete list of today's Zacks #1 Rank stocks here.
AdvanSix has an expected earnings growth rate of 30.6% for the current year. The Zacks Consensus Estimate for ASIX's current-year earnings has been revised 25.1% upward over the past 60 days.
USA Truckis engaged in the transportation of general commodity freight in interstate and foreign commerce. This Zacks Rank #1 stock has a Value Score of A.
USA Truck has an expected earnings growth rate of 26.9% for the current year. The Zacks Consensus Estimate for USAK's current-year earnings has been revised 39.6% upward over the past 60 days.
Greif is a leading global producer of industrial packaging products and services. This Zacks Rank #2 stock has a Value Score of A.
Greif has an expected year-over-year earnings growth rate of 16.9% for the current fiscal year. The Zacks Consensus Estimate for GEF's current fiscal year earnings has been revised 4.9% upward over the past 60 days.
Plains GP Holdings, through its subsidiaries, is involved in the transportation, storage, terminalling, and marketing of crude oil and refined products. This Zacks Rank #2 stock has a Value Score of A.
Plains GP Holdings has an expected year-over-year earnings growth rate of 361.3% for the current year. The Zacks Consensus Estimate for PAGP's current-year earnings has been revised 8.3% upward over the past 60 days.
For the rest of this Screen of the Week article please visit Zacks.com at:
Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.
About Screen of the Week
Zacks.com created the first and best screening system on the web earning the distinction as the "#1 site for screening stocks" by Money Magazine. But powerful screening tools is just the start. That is why Zacks created the Screen of the Week to highlight profitable stock picking strategies that investors can actively use.
Strong Stocks that Should Be in the News
Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has more than doubled the market from 1988 through 2016. Its average gain has been a stellar +25% per year. See these high-potential stocks free >>.
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.
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Zacks.com featured highlights include MarineMax, AdvanSix, USA Truck, Greif, and Plains GP Holdings
For Immediate Release
Chicago, IL – March 17, 2022 – Stocks in this week’s article are MarineMax, Inc. (HZO - Free Report) , AdvanSix Inc.(ASIX - Free Report) , USA Truck, Inc., Greif, Inc.(GEF - Free Report) and Plains GP Holdings, L.P.(PAGP - Free Report) .
Tap These 5 Bargain Stocks with Amazingly Low EV-to-EBITDA Ratios
Investors generally have a fixation on the price-to-earnings (P/E) multiple while seeking stocks that are trading at a bargain. A widely favored approach by value investors is to chase stocks that have a low P/E ratio. However, even this widely popular valuation metric is not without its pitfalls.
While P/E is hands down the most widely used equity valuation ratio in the market, a relatively less used metric called EV-to-EBITDA is often viewed as a better option as it offers a clearer picture of a company's valuation and earnings potential. Unlike P/E. which solely considers a company's equity portion, EV-to-EBITDA determines its total value.
MarineMax, Inc., AdvanSix Inc., USA Truck, Inc., Greif, Inc., and Plains GP Holdings, L.P. are some stocks with impressive EV-to-EBITDA ratios.
EV/EBITDA is a Better Approach, Here's Why
Also referred to as the enterprise multiple, EV-to-EBITDA is the enterprise value (EV) of a stock divided by its earnings before interest, taxes, depreciation and amortization (EBITDA). EV is the sum of a company's market capitalization, its debt and preferred stock minus cash and cash equivalents.
EBITDA, the other element, gives a better idea of a company's profitability as it removes the impact of non-cash expenses like depreciation and amortization that reduce net earnings. It is also often used as a proxy for cash flows.
Just like P/E, the lower the EV-to-EBITDA ratio, the more appealing it is. A low EV-to-EBITDA ratio could be a sign that a stock is potentially undervalued.
EV-to-EBITDA takes into account the debt on a company's balance sheet that the P/E ratio does not. Due to this reason, EV-to-EBITDA is generally used to value the potential acquisition targets as it shows the amount of debt the acquirer has to assume. Stocks boasting a low EV-to-EBITDA multiple could be seen as attractive takeover candidates.
Another key downside of P/E is that it can't be used to value a loss-making entity. Moreover, a company's earnings are also subject to accounting estimates and management manipulation. On the other hand, EV-to-EBITDA is difficult to manipulate and can also be used to value companies incurring losses but are EBITDA-positive.
EV-to-EBITDA is also a useful yardstick in evaluating the value of firms that are highly leveraged and have a high degree of depreciation. Moreover, it can be used to compare companies with different levels of debt.
However, EV-to-EBITDA is not devoid of shortcomings and it alone can't conclusively determine a stock's inherent potential and future performance. The multiple varies across industries and is usually not appropriate while comparing stocks in different industries given their diverse capital expenditure requirements.
As such, a strategy solely based on EV-to-EBITDA might not yield the desired results. But you can club it with the other major ratios in your stock-investing toolbox such as price-to-book (P/B), P/E and price-to-sales (P/S) to screen bargain stocks.
Here are our five picks out of the 19 stocks that passed the screen:
MarineMax is a leading recreational boat and yacht retailer. This Zacks Rank #1 stock has a Value Score of A.
MarineMax has an expected year-over-year earnings growth rate of 16.2% for the current fiscal year. The Zacks Consensus Estimate for HZO's current fiscal year earnings has been revised 6.1% upward over the last 60 days.
AdvanSix is a manufacturer of nylon 6 resin, chemical intermediates and ammonium sulfate fertilizer. This Zacks Rank #1 stock has a Value Score of A. You can see the complete list of today's Zacks #1 Rank stocks here.
AdvanSix has an expected earnings growth rate of 30.6% for the current year. The Zacks Consensus Estimate for ASIX's current-year earnings has been revised 25.1% upward over the past 60 days.
USA Truckis engaged in the transportation of general commodity freight in interstate and foreign commerce. This Zacks Rank #1 stock has a Value Score of A.
USA Truck has an expected earnings growth rate of 26.9% for the current year. The Zacks Consensus Estimate for USAK's current-year earnings has been revised 39.6% upward over the past 60 days.
Greif is a leading global producer of industrial packaging products and services. This Zacks Rank #2 stock has a Value Score of A.
Greif has an expected year-over-year earnings growth rate of 16.9% for the current fiscal year. The Zacks Consensus Estimate for GEF's current fiscal year earnings has been revised 4.9% upward over the past 60 days.
Plains GP Holdings, through its subsidiaries, is involved in the transportation, storage, terminalling, and marketing of crude oil and refined products. This Zacks Rank #2 stock has a Value Score of A.
Plains GP Holdings has an expected year-over-year earnings growth rate of 361.3% for the current year. The Zacks Consensus Estimate for PAGP's current-year earnings has been revised 8.3% upward over the past 60 days.
For the rest of this Screen of the Week article please visit Zacks.com at:
https://www.zacks.com/stock/news/1882672/tap-these-5-bargain-stocks-with-amazingly-low-ev-to-ebitda-ratios?art_rec=quote-stock_overview-zacks_news-ID01-txt-1882672
Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.
About Screen of the Week
Zacks.com created the first and best screening system on the web earning the distinction as the "#1 site for screening stocks" by Money Magazine. But powerful screening tools is just the start. That is why Zacks created the Screen of the Week to highlight profitable stock picking strategies that investors can actively use.
Strong Stocks that Should Be in the News
Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has more than doubled the market from 1988 through 2016. Its average gain has been a stellar +25% per year. See these high-potential stocks free >>.
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Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Contact: Jim Giaquinto
Company: Zacks.com
Phone: 312-265-9268
Email: pr@zacks.com
Visit: https://www.zacks.com/
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.