Back to top

Tale of the Tape

Zacks Equity Research

3 Reasons Engility Holdings (EGL) is a Great Value Stock
November 09, 2016

EGL

Trades from $3

Many investors like to look for value in stocks, but this can be very tough to define. There is great debate regarding which metrics are the best to focus on in this regard, and which are not really quality indicators of future performance. Fortunately, with our new style score system we have identified the key statistics to pay close attention to and thus which stocks might be the best for value investors in the near term.

This method discovered several great candidates for value-oriented investors, but today let’s focus on Engility Holdings, Inc. (EGL - Free Report) as this stock is looking especially impressive right now. And while there are numerous reasons why this is the case, we have highlighted three of the most vital reasons for EGL’s status as a solid value stock below:

Price to Forward Sales for Engility Holdings

One of the most underrated ratios for value investors is the price/forward sales metric. This ratio shows investors how much they are paying for each dollar of revenues generated. In other words, a lower number is better here while a price to sales ratio of 1 means that you are paying one dollar for each dollar in sales.

With a P/S ratio of 0.50, EGL investors are paying 50 cents in stock price for each dollar of revenue generated by the company. Compare this to the industry average of 0.83, and it is safe to say that EGL is undervalued compared to many of its peers on this important metric.

Price/Cash Flow for Engility Holdings Stock

An often overlooked ratio that can still be a great indicator of value is the price/cash flow metric. This reading is preferred by some since it avoids amortization and depreciation concerns and can give a more accurate picture of the financial health in a business.

ENGILITY HLDGS Price, Consensus and EPS Surprise

The P/CF ratio for EGL comes in at 5.95, and since investors are generally looking for a reading under 20 here, this is pretty good news. Meanwhile, we should also point out that the industry average for this metric is 9.53, so Engility Holdings has its peers beat in this regard too.

EGL Earnings Estimate Revisions Moving in the Right Direction

The solid value ratios outlined in the preceding paragraphs might be enough for some investors, but we should also note that the earnings estimate revisions have been trending in a positive direction as well. Analysts who follow EGL stock have been raising their estimates for the company lately, meaning that the EPS picture is looking a bit more favorably for Engility Holdings now.

Over the past 30 days, 5 earnings estimates have gone higher compared to none lower for the full year, while we are also seeing that 3 estimate has move upwards with no downward revision for the next year time frame too.  These revisions have helped to boost the consensus estimate as 30 days ago EGL was expected to post earnings of $1.42 per share for the full year though today it looks to have EPS of $1.60for the full year.

Bottom Line

For the reasons detailed above, investors shouldn’t be surprised to read that we have EGL as a stock with a Value Score of ‘A’ and a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

 So if you are a value investor, definitely keep EGL on your short list as this looks to be a stock that is very well-positioned for gains in the near term.

"Zacks’ Best Private Investment Ideas

While we are happy to share many articles like this on the website, our best recommendations and most in-depth research are not available to the public.

Starting today, for the next month, you can follow all Zacks' private buys and sells in real time. Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Click here for Zacks' private trades >>"

In-Depth Zacks Research for the Tickers Above

ENGILITY HLDGS (EGL) - FREE report >>