Back to top

Image: Bigstock

Zacks.com featured highlights Marathon Oil, The Mosaic, Univar Solutions and Global Ship Lease

Read MoreHide Full Article

For Immediate Release

Chicago, IL – May 2, 2022 – Stocks in this week’s article are Marathon Oil (MRO - Free Report) , The Mosaic Co. (MOS - Free Report) , Univar Solutions Inc.  and Global Ship Lease (GSL - Free Report) .

4 High Earnings Yield Picks to Spruce Up Your Portfolio

Investors often use the P/E ratio and other valuation metrics to pick undervalued stocks with solid upside potential. One can also use another interesting ratio. Earnings yield, expressed in percentage, is calculated as (Annual Earnings per Share/Market Price) x 100. While comparing stocks, if other factors are similar, investors can look out for the one with higher earnings yield. This is because stocks with earnings yield have the potential to provide comparatively greater returns.Marathon Oil, The Mosaic Co.Univar Solutions Inc. and Global Ship Lease are some stocks boasting high earnings yield.

You must have heard of dividend yield (Dividend per share/ Market Price), which is one of the classic metrics for evaluating stocks. If we substitute dividend per share with earnings per share, we get the earnings yield. Just like the case with dividend yield, firms with higher earnings yield are considered underpriced, while those with lower earnings yield are seen as overpriced.

Earnings yield captures both the tangible and intangible yield of the firm, as opposed to dividend yield, which only takes into account the tangible yield. The ratio of dividend yield to earnings yield indicates the proportion of earnings directly distributed in the form of dividend payout.

Importantly, earnings yield can also be used to compare the performance of a market index with the 10-year Treasury yield. For instance, when the yield of the market index is more than the 10-year Treasury yield, stocks can be considered as undervalued than bonds. In this situation, investing in the stock market would be a better option for a value investor.

Earnings Yield: Simply the Inverse of P/E

Earnings yield is nothing but the reciprocal of one of the most popular valuation metrics i.e. the P/E ratio (stock price/earnings per share). Thus, a firm having a P/E ratio of 10.2 will logically have an earnings yield of 9.8% (100/10.2). In fact, as the concept of earnings yield is already indirectly captured in the P/E ratio, earnings yield as an investment valuation metric is not as widely used as the P/E ratio.

Having said that, it should be noted that earnings yield is an important tool for investors with exposure to both stocks and bonds. In fact, with regard to this, earnings yield can be more illuminating than the traditional P/E ratio as the former facilitates comparison of stocks with fixed-income securities.

Here we discuss four of the 118 stocks that qualified the screen:

Marathon Oil: Headquartered in Houston, TX, Marathon Oil is a global, independent company that is engaged in the exploration, production, and marketing of crude oil and natural gas. The wells drilled by Marathon have extremely low oil price breakeven costs and need oil prices of just $35 a barrel to be profitable. Marathon's robust operational metrics suggest strong long-term cash flows that should support share price appreciation. 

The Zacks Consensus Estimate for Marathon Oil's fiscal 2022 earnings and sales implies year-over-year growth of 197.5% and 46%, respectively. The fiscal 2022 bottom-line estimate has been revised upward by 64 cents a share over the past seven days.

Mosaic: Minnesota-based Mosaic is a leading producer and marketer of concentrated phosphate and potash for the global agriculture industry. The company should gain from higher demand for fertilizers. Strong grower economics and crop commodity prices are driving potash demand globally. The acquisition of Vale Fertilizantes and cost-cut initiatives are also likely to boost Mosaic's prospects.

The Zacks Consensus Estimate for Mosaic's fiscal 2022 earnings and sales implies year-over-year growth of 143.4% and 58%, respectively. The fiscal 2022 bottom-line estimate has been revised upward by 93 cents a share over the past 30 days.

Univar: Illinois-based Univar is a global distributor of chemical and ingredients, and a provider of specialty services. The company is benefiting from market share gains, operational execution, cost minimization and a robust liquidity position. The acquisition of Nexeo Solutions enhanced UNVR's capabilities and accelerated its ability to create a significant value for customers, supplier partners, employees as well as shareholders.

The Zacks Consensus Estimate for Univar's fiscal 2022 earnings and sales implies year-over-year growth of 18.5% and 6%, respectively. The fiscal 2022 bottom-line estimate has been revised upward by 53 cents a share over the past 60 days.

Global Ship Lease: London-based Global Ship Lease owns and operates containerships under long-term, fixed-rate charters to world-class container shipping companies. Containership operators have been substantial beneficiaries of the pandemic and GSL is no exception.Global Ship Lease has seen sustained demand and has supportive supply-side fundamentals for its target fleet segments. GSL's strong financials and investor-friendly moves are added positives.

The Zacks Consensus Estimate for Global Ship Lease's fiscal 2022 earnings and sales implies year-over-year growth of 60.3% and 33%, respectively. The fiscal 2022 bottom-line estimate has been revised upward by 54 cents a share over the past 60 days.

You can get the rest of the stocks on this list by signing up now for a 2-week free trial to the Research Wizard stock picking and backtesting software. You can also create your own strategies and test them first before making investments.

The Research Wizard is a great place to begin. It's easy to use. Everything is in plain language. And it's very intuitive. Start your Research Wizard trial today. And the next time you read an economic report, open up the Research Wizard, plug your finds in, and see what gems come out.

Click here to sign up for a free trial to the Research Wizard today.

For the rest of this Screen of the Week article please visit Zacks.com at: https://www.zacks.com/stock/news/1911474/4-high-earnings-yield-picks-to-spruce-up-your-portfolio

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 >>.

Follow us on Twitter:  https://www.twitter.com/zacksresearch

Join us on Facebook:  https://www.facebook.com/ZacksInvestmentResearch

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/performance for information about the performance numbers displayed in this press release.


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


Marathon Oil Corporation (MRO) - free report >>

The Mosaic Company (MOS) - free report >>

Global Ship Lease, Inc. (GSL) - free report >>

Published in