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4 High Earnings Yield Value Stocks That Investors May Buy Now
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The U.S. Labor Department’s latest report revealed 142,000 new jobs were created last month, falling short of expectations and signaling a cooling labor market. Now, the attention turns to today’s Consumer Price Index (CPI) inflation report. Markets are hoping for further progress on inflation. The CPI report could heavily influence the Federal Reserve’s next move on interest rates. Most economists are expecting a 25-basis point (bps) rate cut on Sept.18.
Having said that, given recent global economic volatility and September’s historical weakness, focusing on value stocks could help mitigate risk in uncertain times. Stocks like Wolverine World Wide, Inc. (WWW - Free Report) , PRA Group, Inc. (PRAA - Free Report) , Great Lakes Dredge & Dock (GLDD - Free Report) and Kronos Worldwide, Inc. (KRO - Free Report) are a few value stocks with high earnings yield that you should invest in right away.
Unlock Portfolio Value Via Earnings Yield Metric
Value investing seeks to profit from investing in stocks that appear to be trading at a discount to their intrinsic values and eventually make handsome returns when the stock price rises toward that value, reflecting the actual fundamentals.
One interesting ratio that you can consider for ferreting out attractively valued stocks is earnings yield. This metric, expressed in percentage, is calculated as annual earnings per share (EPS) divided by market price. While comparing stocks, if other factors are similar, the ones with higher earnings yield are considered undervalued, while those with lower earnings yield are seen as overpriced.
Earnings yield also facilitates the comparison of stocks with fixed-income securities. Investors often compare the earnings yield of a stock to the prevailing interest rates, such as the current 10-year Treasury yield, to get a sense of the return on investment it offers compared to virtually risk-free returns. If the yield on a stock is lower than the 10-year Treasury yield, it would be considered overvalued relative to bonds. Conversely, if the yield on the stock is higher, it would be considered undervalued. In this situation, investing in the stock market would be a better option for a value investor.
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.
Here we discuss four of the 26 stocks that qualified the screening:
Wolverine designs, manufactures and distributes a range of casual and active footwear and apparel. Its strategy of delivering innovative, trend-right products, along with strong brand management, is resonating with consumers. WWW’s gross margins are improving thanks to supply-chain optimization, inventory reduction and effective pricing. Additionally, Wolverine is making significant progress in reducing its net debt.
The Zacks Consensus Estimate for Wolverine’s 2024 and 2025 earnings implies year-over-year growth of 1,600% and 51%, respectively. Estimates for 2024 and 2025 earnings per share have moved up by 3 cents and 1 cent, respectively, over the past 60 days. WWW currently sports a Zacks Rank #1 and has a Value Score of B.
PRA Group is a global financial and business services firm operating in the Americas, Australia, and Europe. The company's cash collections are increasing, driven by higher purchase volumes in the United States and Europe, with double-digit growth expected in 2024. PRAA's expansion beyond core debt collection into government collections and audit services is paying off, while strategic acquisitions are fueling its inorganic growth strategy.
The Zacks Consensus Estimate for PRA Group’s 2024 and 2025 earnings implies year-over-year growth of 162% and 51%, respectively. Estimates for 2024 and 2025 earnings per share have moved up by 63 cents and 29 cents, respectively, over the past 60 days. PRAA currently sports a Zacks Rank #1 and has a Value Score of B.
Great Lakes Dredge is the largest provider of dredging services in the United States. GLDD is poised for growth through strong domestic operations, high equipment utilization and solid project execution. Its strategic expansion into the offshore wind market aligns with America's decarbonization goals. With a robust backlog, enhanced fleet and focused initiatives, GLDD is well-positioned to capitalize on the growing dredging bid market.
The Zacks Consensus Estimate for GLDD’s 2024 and 2025 earnings implies year-over-year growth of 471% and 6%, respectively. Estimates for 2024 and 2025 earnings per share have moved up by 8 cents and 2 cents, respectively, over the past 60 days. Great Lakes Dredge currently carries a Zacks Rank #2 and has a Value Score of A.
Kronos is a leading producer and marketer of TiO2, a pigment for providing whiteness and opacity in various products. The company is set to benefit from higher demand for TiO2 in major markets. KRO’s efforts to cut costs and align production with demand are expected to support its margins. For full-year 2024, Kronos expects higher operating results driven by improved demand, higher selling prices and reduced production costs.
The Zacks Consensus Estimate for KRO’s 2024 and 2025 earnings implies year-over-year growth of 305% and 59%, respectively. Estimates for 2024 and 2025 earnings per share have moved up by 3 cents and 28 cents, respectively, over the past 60 days. Kronos currently carries a Zacks Rank #2 and has a Value Score of B.
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 That Investors May Buy Now
The U.S. Labor Department’s latest report revealed 142,000 new jobs were created last month, falling short of expectations and signaling a cooling labor market. Now, the attention turns to today’s Consumer Price Index (CPI) inflation report. Markets are hoping for further progress on inflation. The CPI report could heavily influence the Federal Reserve’s next move on interest rates. Most economists are expecting a 25-basis point (bps) rate cut on Sept.18.
Having said that, given recent global economic volatility and September’s historical weakness, focusing on value stocks could help mitigate risk in uncertain times. Stocks like Wolverine World Wide, Inc. (WWW - Free Report) , PRA Group, Inc. (PRAA - Free Report) , Great Lakes Dredge & Dock (GLDD - Free Report) and Kronos Worldwide, Inc. (KRO - Free Report) are a few value stocks with high earnings yield that you should invest in right away.
Unlock Portfolio Value Via Earnings Yield Metric
Value investing seeks to profit from investing in stocks that appear to be trading at a discount to their intrinsic values and eventually make handsome returns when the stock price rises toward that value, reflecting the actual fundamentals.
One interesting ratio that you can consider for ferreting out attractively valued stocks is earnings yield. This metric, expressed in percentage, is calculated as annual earnings per share (EPS) divided by market price. While comparing stocks, if other factors are similar, the ones with higher earnings yield are considered undervalued, while those with lower earnings yield are seen as overpriced.
Earnings yield also facilitates the comparison of stocks with fixed-income securities. Investors often compare the earnings yield of a stock to the prevailing interest rates, such as the current 10-year Treasury yield, to get a sense of the return on investment it offers compared to virtually risk-free returns. If the yield on a stock is lower than the 10-year Treasury yield, it would be considered overvalued relative to bonds. Conversely, if the yield on the stock is higher, it would be considered undervalued. In this situation, investing in the stock market would be a better option for a value investor.
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 26 stocks that qualified the screening:
Wolverine designs, manufactures and distributes a range of casual and active footwear and apparel. Its strategy of delivering innovative, trend-right products, along with strong brand management, is resonating with consumers. WWW’s gross margins are improving thanks to supply-chain optimization, inventory reduction and effective pricing. Additionally, Wolverine is making significant progress in reducing its net debt.
The Zacks Consensus Estimate for Wolverine’s 2024 and 2025 earnings implies year-over-year growth of 1,600% and 51%, respectively. Estimates for 2024 and 2025 earnings per share have moved up by 3 cents and 1 cent, respectively, over the past 60 days. WWW currently sports a Zacks Rank #1 and has a Value Score of B.
PRA Group is a global financial and business services firm operating in the Americas, Australia, and Europe. The company's cash collections are increasing, driven by higher purchase volumes in the United States and Europe, with double-digit growth expected in 2024. PRAA's expansion beyond core debt collection into government collections and audit services is paying off, while strategic acquisitions are fueling its inorganic growth strategy.
The Zacks Consensus Estimate for PRA Group’s 2024 and 2025 earnings implies year-over-year growth of 162% and 51%, respectively. Estimates for 2024 and 2025 earnings per share have moved up by 63 cents and 29 cents, respectively, over the past 60 days. PRAA currently sports a Zacks Rank #1 and has a Value Score of B.
Great Lakes Dredge is the largest provider of dredging services in the United States. GLDD is poised for growth through strong domestic operations, high equipment utilization and solid project execution. Its strategic expansion into the offshore wind market aligns with America's decarbonization goals. With a robust backlog, enhanced fleet and focused initiatives, GLDD is well-positioned to capitalize on the growing dredging bid market.
The Zacks Consensus Estimate for GLDD’s 2024 and 2025 earnings implies year-over-year growth of 471% and 6%, respectively. Estimates for 2024 and 2025 earnings per share have moved up by 8 cents and 2 cents, respectively, over the past 60 days. Great Lakes Dredge currently carries a Zacks Rank #2 and has a Value Score of A.
Kronos is a leading producer and marketer of TiO2, a pigment for providing whiteness and opacity in various products. The company is set to benefit from higher demand for TiO2 in major markets. KRO’s efforts to cut costs and align production with demand are expected to support its margins. For full-year 2024, Kronos expects higher operating results driven by improved demand, higher selling prices and reduced production costs.
The Zacks Consensus Estimate for KRO’s 2024 and 2025 earnings implies year-over-year growth of 305% and 59%, respectively. Estimates for 2024 and 2025 earnings per share have moved up by 3 cents and 28 cents, respectively, over the past 60 days. Kronos currently carries a Zacks Rank #2 and has a Value Score of B.
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.