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4 High Earnings Yield Value Stocks to Maximize Returns
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Value investing is a time-tested investment strategy that involves identifying assets trading below their intrinsic worth and buying them at a bargain. This philosophy rests on the belief that market valuations frequently deviate from fundamental realities, presenting opportunities for discerning investors to profit from these dislocations over time.
One essential tool in the value investor's toolbox is earnings yield. This metric acts as a compass, helping investors navigate the vast expanse of investment options by providing insights into the profitability of a stock relative to its market price. Earnings yield is calculated by dividing a company's earnings per share (EPS) by its current stock price. The formula can be expressed as Earnings Yield = Earnings Per Share (EPS)/Current Stock Price.
This formula illuminates the profitability of an investment, revealing the amount of profit generated per dollar invested in the stock. Essentially, earnings yield serves as the inverse of the price-to-earnings (P/E) ratio. A high earnings yield suggests that the stock may be undervalued, offering investors an opportunity for potential growth, while a low earnings yield may signal overvaluation, prompting caution among investors.
Moreover, earnings yield serves as a versatile tool for comparative analysis, allowing investors to juxtapose market index performance with the 10-year Treasury yield. This comparison enables value investors to gauge the relative attractiveness of stocks compared to fixed-income securities. When the earnings yield of the market index surpasses the bond yield, it may signal favorable conditions for investing in stocks. This insight is particularly valuable for investors with diversified portfolios, encompassing both equities and bonds.
By integrating earnings yield into their investment approach, value investors gain a nuanced understanding of market dynamics, uncovering hidden gems amid the noise of market sentiment.
We have set an Earnings Yield greater than 10% as our primary screening criterion but it alone cannot be used for picking stocks that have the potential to generate solid returns. So, we have added the following parameters to the screen:
Estimated EPS growth for the next 12 months greater than or equal to the S&P 500: This metric compares the 12-month forward EPS estimate with the 12-month actual EPS.
Average Daily Volume (20 Day) greater than or equal to 100,000: High trading volume implies that a stock has adequate liquidity.
Here we discuss four of the 41 stocks that qualified the screening:
Hanesbrands engages in the design, manufacture and sale of apparel essentials for men, women and children in the United States and internationally.The company is making good progress in pinnacle product offerings and accounts. Its focus on reigniting innerwear growth and gaining market share through innovation and retail expansion is promising. Additionally, Hanesbrands is on track with initiatives to simplify the business and reduce costs.
The Zacks Consensus Estimate for Hanesbrands’ 2024 and 2025 earnings implies year-over-year growth of 650% and 55%, respectively. Estimates for 2024 and 2025 earnings per share have moved up by 1 cent each over the past 30 days. HBI currently sports a Zacks Rank #1 and has a Value Score of A.
Royal Caribbean is a cruise company that owns and operates three global brands — Royal Caribbean International, Celebrity Cruises and Azamara Club Cruises. The company is capitalizing on robust cruising demand from both new and loyal guests, alongside strong booking trends and consumer spending onboard and pre-cruise. It plans to invest in a modern digital travel platform to enhance vacation booking and expand wallet share, while also focusing on new innovative ships and onboard experiences to drive superior yields and margins.
The Zacks Consensus Estimate for RCL’s 2024 and 2025 earnings implies year-over-year growth of 62% and 15%, respectively. Estimates for 2024 and 2025 earnings per share have moved up by 7 cents and 88 cents, respectively, over the past 30 days. Royal Caribbean currently sports a Zacks Rank #1 and has a Value Score of B.
Allstate is one of the leading property-casualty insurers. It has been benefiting from consistent growth in premiums, attributed to strategic acquisitions and expanding ventures. The company's diversified product portfolio and disciplined pricing bode well. Its focus on optimizing core operations has allowed it to redirect resources toward high-growth areas. Cost-saving initiatives are projected to boost profits. Strong cash flows are facilitating shareholder value-boosting measures.
The Zacks Consensus Estimate for ALL’s 2024 and 2025 earnings implies year-over-year growth of 1,478% and 14.4%, respectively. Estimates for 2024 and 2025 earnings per share have moved up by 36 cents and 8 cents, respectively, over the past seven days. Allstate currently sports a Zacks Rank #1 and has a Value Score of B.
Aptiv is one of the leading global technology and mobility companies, which mainly serves the automotive sector. With excellent system integration expertise, Aptiv is well-positioned to leverage the growing electrification, connectivity and autonomy trends in the automotive sector. The company is well poised to gain from technology investments and acquisitions that help it capitalize on developing opportunities in the auto market.
The Zacks Consensus Estimate for APTV’s 2024 and 2025 earnings implies year-over-year growth of 24% and 30%, respectively. Estimates for 2024 and 2025 earnings per share have moved up by 4 cents and 12 cents, respectively, over the past seven days. Aptiv currently sports a Zacks Rank #1 and has a Value Score of A.
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.
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.
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4 High Earnings Yield Value Stocks to Maximize Returns
Value investing is a time-tested investment strategy that involves identifying assets trading below their intrinsic worth and buying them at a bargain. This philosophy rests on the belief that market valuations frequently deviate from fundamental realities, presenting opportunities for discerning investors to profit from these dislocations over time.
One essential tool in the value investor's toolbox is earnings yield. This metric acts as a compass, helping investors navigate the vast expanse of investment options by providing insights into the profitability of a stock relative to its market price. Earnings yield is calculated by dividing a company's earnings per share (EPS) by its current stock price. The formula can be expressed as Earnings Yield = Earnings Per Share (EPS)/Current Stock Price.
This formula illuminates the profitability of an investment, revealing the amount of profit generated per dollar invested in the stock. Essentially, earnings yield serves as the inverse of the price-to-earnings (P/E) ratio. A high earnings yield suggests that the stock may be undervalued, offering investors an opportunity for potential growth, while a low earnings yield may signal overvaluation, prompting caution among investors.
Moreover, earnings yield serves as a versatile tool for comparative analysis, allowing investors to juxtapose market index performance with the 10-year Treasury yield. This comparison enables value investors to gauge the relative attractiveness of stocks compared to fixed-income securities. When the earnings yield of the market index surpasses the bond yield, it may signal favorable conditions for investing in stocks. This insight is particularly valuable for investors with diversified portfolios, encompassing both equities and bonds.
By integrating earnings yield into their investment approach, value investors gain a nuanced understanding of market dynamics, uncovering hidden gems amid the noise of market sentiment.
Hanesbrands Inc. (HBI - Free Report) , Royal Caribbean Cruises (RCL - Free Report) , Allstate Corporation (ALL - Free Report) and Aptiv PLC (APTV - Free Report) are a few solid high earnings yield picks for value investors.
The Winning Strategy
We have set an Earnings Yield greater than 10% as our primary screening criterion but it alone cannot be used for picking stocks that have the potential to generate solid returns. So, we have added the following parameters to the screen:
Estimated EPS growth for the next 12 months greater than or equal to the S&P 500: This metric compares the 12-month forward EPS estimate with the 12-month actual EPS.
Average Daily Volume (20 Day) greater than or equal to 100,000: High trading volume implies that a stock has adequate liquidity.
Current Price greater than or equal to $5.
Buy-Rated Stocks: Stocks with a Zacks Rank #1 (Strong Buy) or 2 (Buy) have been known to outperform peers in any type of market environment. You can see the complete list of today’s Zacks #1 Rank stocks here.
Our Picks
Here we discuss four of the 41 stocks that qualified the screening:
Hanesbrands engages in the design, manufacture and sale of apparel essentials for men, women and children in the United States and internationally.The company is making good progress in pinnacle product offerings and accounts. Its focus on reigniting innerwear growth and gaining market share through innovation and retail expansion is promising. Additionally, Hanesbrands is on track with initiatives to simplify the business and reduce costs.
The Zacks Consensus Estimate for Hanesbrands’ 2024 and 2025 earnings implies year-over-year growth of 650% and 55%, respectively. Estimates for 2024 and 2025 earnings per share have moved up by 1 cent each over the past 30 days. HBI currently sports a Zacks Rank #1 and has a Value Score of A.
Royal Caribbean is a cruise company that owns and operates three global brands — Royal Caribbean International, Celebrity Cruises and Azamara Club Cruises. The company is capitalizing on robust cruising demand from both new and loyal guests, alongside strong booking trends and consumer spending onboard and pre-cruise. It plans to invest in a modern digital travel platform to enhance vacation booking and expand wallet share, while also focusing on new innovative ships and onboard experiences to drive superior yields and margins.
The Zacks Consensus Estimate for RCL’s 2024 and 2025 earnings implies year-over-year growth of 62% and 15%, respectively. Estimates for 2024 and 2025 earnings per share have moved up by 7 cents and 88 cents, respectively, over the past 30 days. Royal Caribbean currently sports a Zacks Rank #1 and has a Value Score of B.
Allstate is one of the leading property-casualty insurers. It has been benefiting from consistent growth in premiums, attributed to strategic acquisitions and expanding ventures. The company's diversified product portfolio and disciplined pricing bode well. Its focus on optimizing core operations has allowed it to redirect resources toward high-growth areas. Cost-saving initiatives are projected to boost profits. Strong cash flows are facilitating shareholder value-boosting measures.
The Zacks Consensus Estimate for ALL’s 2024 and 2025 earnings implies year-over-year growth of 1,478% and 14.4%, respectively. Estimates for 2024 and 2025 earnings per share have moved up by 36 cents and 8 cents, respectively, over the past seven days. Allstate currently sports a Zacks Rank #1 and has a Value Score of B.
Aptiv is one of the leading global technology and mobility companies, which mainly serves the automotive sector. With excellent system integration expertise, Aptiv is well-positioned to leverage the growing electrification, connectivity and autonomy trends in the automotive sector. The company is well poised to gain from technology investments and acquisitions that help it capitalize on developing opportunities in the auto market.
The Zacks Consensus Estimate for APTV’s 2024 and 2025 earnings implies year-over-year growth of 24% and 30%, respectively. Estimates for 2024 and 2025 earnings per share have moved up by 4 cents and 12 cents, respectively, over the past seven days. Aptiv currently sports a Zacks Rank #1 and has a Value Score of A.
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.
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.
Disclosure: Performance information for Zacks’ portfolios and strategies are available at: https://www.zacks.com/performance.