Value-focused investors target mispriced stocks with the idea that others will eventually ‘catch on’ and recognize their actual value, which can lead to serious gains. After all, we all enjoy a nice deal.
And for those seeking stocks without stretched valuations – The Greenbrier Companies GBX, Stride LRN, and Enersys ENS – could all be considerations.
In addition to sound valuation levels, all three sport a favorable Zacks Rank and carry solid growth profiles, with the former indicating optimism among analysts. Let’s take a closer look at each.
The Greenbrier Companies
Greenbrier Companies is a leading supplier of transportation equipment and services to the railroad and other related industries. The stock is a Zacks Rank #1 (Strong Buy), with the revisions trend particularly notable for its current fiscal year, up 41% over the last year.
Image Source: Zacks Investment Research
The company’s shares presently trade at a 0.4X forward price-to-sales ratio, nicely beneath five-year highs of 0.9X in 2021. The forward earnings multiple presently sits at 13.2X, beneath 2022 highs of 22.4X and in line with the five-year median.
Consensus expectations for its current year presently suggest 23% earnings growth, with estimates for FY25 alluding to additional growth.
Stride
Stride is an education services company that provides virtual and blended learning. Consensus expectations for its current year presently reflect 35% earnings growth on 9% higher sales.
The stock is a Zacks Rank #1 (Strong Buy), with positive revisions happening across nearly the board.
Image Source: Zacks Investment Research
Stride posted solid results in its latest quarterly release, exceeding our consensus EPS Estimate by more than 120% and posting a 5% sales beat. Earnings jumped from the year-ago loss of -$0.54 per share, with revenue seeing a 13% boost year-over-year and reflecting a quarterly record.
Shares have surged post-earnings in back-to-back releases, as shown below by the green arrows circled.
Image Source: Zacks Investment Research
Shares presently trade at a 14.5X forward earnings multiple, nicely beneath the 17.4X five-year median and highs of 64.1X in 2020. The forward price-to-sales currently works out to be 1.3X, a few ticks above the five-year median but still beneath highs of 1.9X in 2020.
EnerSys
EnerSys engages in the manufacturing, marketing, and distribution of various industrial batteries worldwide. The stock is a Zacks Rank #1 (Strong Buy), with earnings expectations jumping higher across the board.
Image Source: Zacks Investment Research
The company’s profitability picture is expected to improve in a big way in its current fiscal year (FY24), with expectations alluding to a 54% year-over-year improvement in earnings. Still, the top line appears to be under some pressure, with sales expected to pull back a modest 1% in FY24 as well.
Concerning the valuation picture, the current forward earnings multiple sits at 12.0X, nicely below the five-year median and highs of 22.9X back in 2021. The forward price-to-sales ratio comes out to 1.1X, in line with the five-year median and below highs of 1.5X in 2021.
Bottom Line
Value investors always seek out deals, expecting others to eventually catch onto the discounts.
When you pair this strategy with the Zacks Rank, which is focused on earnings estimate revisions, it’s much easier to find mispriced stocks with great near-term potential.
And all three top-ranked stocks above – The Greenbrier Companies GBX, Stride LRN, and Enersys ENS – could be considerations for those with a value-conscious approach.
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Greenbrier Companies, Inc. (The) (GBX) : Free Stock Analysis Report
Enersys (ENS) : Free Stock Analysis Report
Stride, Inc. (LRN) : Free Stock Analysis Report
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