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Zacks.com featured highlights Hamilton Insurance, Amplify Energy, The ONE Group, PagSeguro and Pampa Energia
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For Immediate Release
Chicago, IL – July 29, 2024 – Stocks in this week’s article are Hamilton Insurance Group, Ltd. (HG - Free Report) , Amplify Energy Corp. (AMPY - Free Report) , The ONE Group Hospitality, Inc. (STKS - Free Report) , PagSeguro Digital Ltd. (PAGS - Free Report) and Pampa Energia S.A. (PAM - Free Report) .
5 Value Stocks with Exciting EV-to-EBITDA Ratios to Snap Up Now
Price-to-earnings (P/E), given its inherent simplicity, is the most commonly used metric in the value-investing world. It is preferred by many investors while handpicking stocks trading at a bargain. However, even this straightforward, broadly used valuation metric has a few downsides.
While P/E enjoys great popularity among value investors, a less-used and more complicated metric called EV-to-EBITDA is sometimes viewed as a better alternative. EV-to-EBITDA gives the true picture of a company’s valuation and earnings potential. It has a more comprehensive approach to valuation.
Hamilton Insurance Group, Ltd., Amplify Energy Corp., The ONE Group Hospitality, Inc., PagSeguro Digital Ltd. and Pampa Energia S.A. are some stocks with impressive EV-to-EBITDA ratios.
Is EV-to-EBITDA a Better Substitute to P/E?
EV-to-EBITDA is essentially 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 component of the multiple, 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.
Generally, the lower the EV-to-EBITDA ratio, the more enticing it is. A low EV-to-EBITDA ratio could indicate 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 shortcoming of P/E is that it can’t be used to value a loss-making firm. 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 making losses but are EBITDA-positive.
EV-to-EBITDA is also a useful yardstick in measuring 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 alone cannot 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.
A strategy solely based on EV-to-EBITDA might not yield the desired results. However, 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 value stocks.
Here are our five picks out of the 14 stocks that passed the screen:
Hamilton Insurance Group is a specialty insurance and reinsurance company that underwrites risks on a worldwide basis through its fully-owned subsidiaries. This Zacks Rank #1 stock has a Value Score of A.
Hamilton Insurance Group has an expected year-over-year earnings growth rate of around 60.7% for 2024. The Zacks Consensus Estimate for HG's 2024 earnings has been revised upward by 14.3% over the past 60 days.
The ONE Group Hospitality is a restaurant company that develops and operates a portfolio of high-energy restaurants and lounges, and provides hospitality management services. This Zacks Rank #2 stock has a Value Score of A. You can see the complete list of today’s Zacks #1 Rank stocks here.
The ONE Group Hospitality has an expected year-over-year earnings growth rate of 83.3% for 2024. The consensus estimate for STKS's 2024 earnings has been revised upward by 2.3% over the past 60 days.
Amplify Energy is an oil and natural gas company engaged in the acquisition, development, exploitation and production of oil and natural gas properties. This Zacks Rank #2 stock has a Value Score of A.
The Zacks Consensus Estimate for Amplify Energy's 2024 earnings has been revised upward by 17.4% over the past 60 days. AMPY has a trailing four-quarter earnings surprise of roughly 44.5%, on average.
PagSeguro Digital provides financial technology solutions and services for micro-merchants and small and medium-sized businesses in Brazil and internationally. This Zacks Rank #2 stock has a Value Score of A.
PagSeguro Digital has an expected year-over-year earnings growth rate of 32.1% for 2024. The consensus estimate for PAGS’s 2024 earnings has been revised 11.6% upward over the past 60 days.
Pampa Energia is a leading independent energy-integrated company in Argentina. This Zacks Rank #2 stock has a Value Score of A.
Pampa Energia has an expected year-over-year earnings growth rate of 43.6% for 2024. PAM beat the Zacks Consensus Estimate in three of the last four quarters. In this time frame, it has delivered an earnings surprise of roughly 81.1%, on average.
You can get the rest of the stocks on this list by signing up now for your 2-week free trial to the Research Wizard and start using this screen in your own trading. Further, you can also create your own strategies and test them first before taking the investment plunge.
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.
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/performance for information about the performance numbers displayed in this press release.
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Zacks.com featured highlights Hamilton Insurance, Amplify Energy, The ONE Group, PagSeguro and Pampa Energia
For Immediate Release
Chicago, IL – July 29, 2024 – Stocks in this week’s article are Hamilton Insurance Group, Ltd. (HG - Free Report) , Amplify Energy Corp. (AMPY - Free Report) , The ONE Group Hospitality, Inc. (STKS - Free Report) , PagSeguro Digital Ltd. (PAGS - Free Report) and Pampa Energia S.A. (PAM - Free Report) .
5 Value Stocks with Exciting EV-to-EBITDA Ratios to Snap Up Now
Price-to-earnings (P/E), given its inherent simplicity, is the most commonly used metric in the value-investing world. It is preferred by many investors while handpicking stocks trading at a bargain. However, even this straightforward, broadly used valuation metric has a few downsides.
While P/E enjoys great popularity among value investors, a less-used and more complicated metric called EV-to-EBITDA is sometimes viewed as a better alternative. EV-to-EBITDA gives the true picture of a company’s valuation and earnings potential. It has a more comprehensive approach to valuation.
Hamilton Insurance Group, Ltd., Amplify Energy Corp., The ONE Group Hospitality, Inc., PagSeguro Digital Ltd. and Pampa Energia S.A. are some stocks with impressive EV-to-EBITDA ratios.
Is EV-to-EBITDA a Better Substitute to P/E?
EV-to-EBITDA is essentially 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 component of the multiple, 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.
Generally, the lower the EV-to-EBITDA ratio, the more enticing it is. A low EV-to-EBITDA ratio could indicate 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 shortcoming of P/E is that it can’t be used to value a loss-making firm. 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 making losses but are EBITDA-positive.
EV-to-EBITDA is also a useful yardstick in measuring 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 alone cannot 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.
A strategy solely based on EV-to-EBITDA might not yield the desired results. However, 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 value stocks.
Here are our five picks out of the 14 stocks that passed the screen:
Hamilton Insurance Group is a specialty insurance and reinsurance company that underwrites risks on a worldwide basis through its fully-owned subsidiaries. This Zacks Rank #1 stock has a Value Score of A.
Hamilton Insurance Group has an expected year-over-year earnings growth rate of around 60.7% for 2024. The Zacks Consensus Estimate for HG's 2024 earnings has been revised upward by 14.3% over the past 60 days.
The ONE Group Hospitality is a restaurant company that develops and operates a portfolio of high-energy restaurants and lounges, and provides hospitality management services. This Zacks Rank #2 stock has a Value Score of A. You can see the complete list of today’s Zacks #1 Rank stocks here.
The ONE Group Hospitality has an expected year-over-year earnings growth rate of 83.3% for 2024. The consensus estimate for STKS's 2024 earnings has been revised upward by 2.3% over the past 60 days.
Amplify Energy is an oil and natural gas company engaged in the acquisition, development, exploitation and production of oil and natural gas properties. This Zacks Rank #2 stock has a Value Score of A.
The Zacks Consensus Estimate for Amplify Energy's 2024 earnings has been revised upward by 17.4% over the past 60 days. AMPY has a trailing four-quarter earnings surprise of roughly 44.5%, on average.
PagSeguro Digital provides financial technology solutions and services for micro-merchants and small and medium-sized businesses in Brazil and internationally. This Zacks Rank #2 stock has a Value Score of A.
PagSeguro Digital has an expected year-over-year earnings growth rate of 32.1% for 2024. The consensus estimate for PAGS’s 2024 earnings has been revised 11.6% upward over the past 60 days.
Pampa Energia is a leading independent energy-integrated company in Argentina. This Zacks Rank #2 stock has a Value Score of A.
Pampa Energia has an expected year-over-year earnings growth rate of 43.6% for 2024. PAM beat the Zacks Consensus Estimate in three of the last four quarters. In this time frame, it has delivered an earnings surprise of roughly 81.1%, on average.
You can get the rest of the stocks on this list by signing up now for your 2-week free trial to the Research Wizard and start using this screen in your own trading. Further, you can also create your own strategies and test them first before taking the investment plunge.
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/2309721/5-value-stocks-with-exciting-ev-to-ebitda-ratios-to-snap-up-now
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.