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4 Value Stocks to Beat Estimates This Earnings Season
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Value stocks are those that the market is undervaluing for some reason. So effectively, they are stocks that are trading at a discount to their intrinsic value. Investors buying this kind of stock are looking to hold on until their true value is realized.
Therefore, this approach to investing entails a somewhat longer holding period and lower risk. Value stocks sometimes, though not always offer a dividend, depending on how mature the company is.
During earnings season of course, the biggest driver of stocks is estimate revisions. When a company beats the estimated earnings/revenue and provides encouraging guidance, estimates inevitably go up. Then the shares become undervalued.
But investors also pile into these stocks, which sends the shares up until a fair valuation is achieved. At times, this leads to disequilibrium as prices appreciate more than the true value and have to be bid down again. But in general, this creates opportunity for investment in stocks.
But timing is all important in the stock market. What we really need is to get into the stocks before the earnings beat and subsequent estimate revisions because that way, we can make the biggest gains.
For this purpose, we have a proprietary tool at Zacks, called the Earnings ESP (Expected Surprise Prediction), which is essentially the difference between the Zacks Consensus and the most recent estimate, expressed as a percentage. It’s based on the premise that the most recent estimate considers the most recent events impacting the company’s earnings, which also makes it the most accurate.
Historically, it has been seen that a company with a Zacks Rank of #1, #2 or #3 and positive ESP generally posts a positive surprise.
So here, I’ve picked a few buy-ranked stocks that have a Value Score A or B, a positive estimate revision trend and a positive ESP. They also have a consistent history of beating earnings estimates.
Louisiana-Pacific is a leading manufacturer of sustainable, quality engineered wood building materials, structural framing products as well as exterior siding for use in residential, industrial and light commercial construction. Currently, the company operates 20 modern, strategically located facilities in the United States and Canada, two facilities in Chile and one facility in Brazil. It also operates facilities through a joint venture. The company’s products are used primarily in new home construction, repair as well as remodeling and outdoor structures.
Zacks Rank #1 (Strong Buy)
Value Score B
Industry: Building Products - Wood (top 5%)
2021 EPS estimate up 96.4% in the last 90 days, up 48.3% in the last 30 days
2021 EPS growth estimate 103.7%
Earnings ESP for the quarter to be reported is 3.80%
Has topped the Zacks Consensus Estimate by an average 41.5% in the last 4 quarters
Malvern, Pennsylvania-based Vishay is a global manufacturer and supplier of semiconductors and passive components.
Zacks Rank #2 (Buy)
Value Score A
Industry: Semiconductor – Discretes (top 24%)
2021 EPS estimate up 43.6% in the last 90 days, up 10.4% in the last 30 days
2021 EPS growth estimate 107.6%
Earnings ESP for the quarter to be reported is 5.22%
Has topped the Zacks Consensus Estimate by an average 66.8% in the last 4 quarters
GasLog Partners LP
GasLog Partners LP owns, operates and acquires LNG carriers with multi-year charters. The company charges customers for the transportation of their LNG using its LNG carriers. GasLog Partners LP is based in Monaco.
Zacks Rank #1
Value Score A
Industry: Transportation - Shipping (top 32%)
2021 EPS estimate up 38.0% in the last 90 days, up 22.5% in the last 30 days
2021 EPS growth estimate -24.0%
Earnings ESP for the quarter to be reported is 7.25%
Has topped the Zacks Consensus Estimate by an average 20.1% in the last 4 quarters
Franchise Group, Inc.
Franchise Group is the indirect parent company of Liberty Tax Service and Buddy's Home Furnishings. It is focused on the evaluation and acquisition of franchise-oriented or complementary businesses.
The company also owns Buddy's Home Furnishings, a specialty retailer engaged in the business of leasing and selling consumer electronics, residential furniture, appliances and household accessories. The company is based in Virginia Beach, United States.
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4 Value Stocks to Beat Estimates This Earnings Season
Value stocks are those that the market is undervaluing for some reason. So effectively, they are stocks that are trading at a discount to their intrinsic value. Investors buying this kind of stock are looking to hold on until their true value is realized.
Therefore, this approach to investing entails a somewhat longer holding period and lower risk. Value stocks sometimes, though not always offer a dividend, depending on how mature the company is.
During earnings season of course, the biggest driver of stocks is estimate revisions. When a company beats the estimated earnings/revenue and provides encouraging guidance, estimates inevitably go up. Then the shares become undervalued.
But investors also pile into these stocks, which sends the shares up until a fair valuation is achieved. At times, this leads to disequilibrium as prices appreciate more than the true value and have to be bid down again. But in general, this creates opportunity for investment in stocks.
But timing is all important in the stock market. What we really need is to get into the stocks before the earnings beat and subsequent estimate revisions because that way, we can make the biggest gains.
For this purpose, we have a proprietary tool at Zacks, called the Earnings ESP (Expected Surprise Prediction), which is essentially the difference between the Zacks Consensus and the most recent estimate, expressed as a percentage. It’s based on the premise that the most recent estimate considers the most recent events impacting the company’s earnings, which also makes it the most accurate.
Historically, it has been seen that a company with a Zacks Rank of #1, #2 or #3 and positive ESP generally posts a positive surprise.
So here, I’ve picked a few buy-ranked stocks that have a Value Score A or B, a positive estimate revision trend and a positive ESP. They also have a consistent history of beating earnings estimates.
LouisianaPacific Corp. (LPX - Free Report)
Louisiana-Pacific is a leading manufacturer of sustainable, quality engineered wood building materials, structural framing products as well as exterior siding for use in residential, industrial and light commercial construction. Currently, the company operates 20 modern, strategically located facilities in the United States and Canada, two facilities in Chile and one facility in Brazil. It also operates facilities through a joint venture. The company’s products are used primarily in new home construction, repair as well as remodeling and outdoor structures.
Zacks Rank #1 (Strong Buy)
Value Score B
Industry: Building Products - Wood (top 5%)
2021 EPS estimate up 96.4% in the last 90 days, up 48.3% in the last 30 days
2021 EPS growth estimate 103.7%
Earnings ESP for the quarter to be reported is 3.80%
Has topped the Zacks Consensus Estimate by an average 41.5% in the last 4 quarters
Vishay Intertechnology, Inc. (VSH - Free Report)
Malvern, Pennsylvania-based Vishay is a global manufacturer and supplier of semiconductors and passive components.
Zacks Rank #2 (Buy)
Value Score A
Industry: Semiconductor – Discretes (top 24%)
2021 EPS estimate up 43.6% in the last 90 days, up 10.4% in the last 30 days
2021 EPS growth estimate 107.6%
Earnings ESP for the quarter to be reported is 5.22%
Has topped the Zacks Consensus Estimate by an average 66.8% in the last 4 quarters
GasLog Partners LP
GasLog Partners LP owns, operates and acquires LNG carriers with multi-year charters. The company charges customers for the transportation of their LNG using its LNG carriers. GasLog Partners LP is based in Monaco.
Zacks Rank #1
Value Score A
Industry: Transportation - Shipping (top 32%)
2021 EPS estimate up 38.0% in the last 90 days, up 22.5% in the last 30 days
2021 EPS growth estimate -24.0%
Earnings ESP for the quarter to be reported is 7.25%
Has topped the Zacks Consensus Estimate by an average 20.1% in the last 4 quarters
Franchise Group, Inc.
Franchise Group is the indirect parent company of Liberty Tax Service and Buddy's Home Furnishings. It is focused on the evaluation and acquisition of franchise-oriented or complementary businesses.
The company also owns Buddy's Home Furnishings, a specialty retailer engaged in the business of leasing and selling consumer electronics, residential furniture, appliances and household accessories. The company is based in Virginia Beach, United States.
Zacks Rank #1
Value Score B
Industry: Consumer Products - Staples (bottom 17%)
Price Movement Over Past Month
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.
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