Zacks.com featured highlights Deutsche Bank, Signet Jewelers, Phillips 66, Acco Brands and Sterling Infrastructure
For Immediate Release
Chicago, IL – February 7, 2023 – Stocks in this week’s article are Deutsche Bank Aktiengesellschaft DB, Signet Jewelers SIG, Phillips 66 PSX, Acco Brands Corp. ACCO and Sterling Infrastructure STRL.
5 Promising Price-to-Book-Value Stocks to Buy in February
It’s not an easy job to find value stocks. Being aware of a company's key financial numbers like earnings per share and sales growth can help investors identify stocks that are trading for less than what they're worth. However, a proper analysis of the fundamentals with the help of a number of metrics is necessary to determine whether a stock is a good bargain or not.
For narrowing down the list of undervalued stocks, price to earnings (P/E) and price to sales (P/S) are the first ratios that come to an investor’s mind. However, the price-to-book ratio (P/B ratio), though underrated, is also an easy-to-use valuation tool for identifying low-priced stocks with high-growth prospects.
The P/B ratio is calculated as below:
P/B ratio = market capitalization / book value of equity
The P/B ratio helps to identify low-priced stocks that have high growth prospects. Deutsche Bank Aktiengesellschaft, Signet Jewelers, Phillips 66, Acco Brands Corp. and Sterling Infrastructure are some such stocks.
Now let us understand the concept of book value.
What’s Book Value?
Book value is the total value that would be left over, according to the company’s balance sheet, if it goes bankrupt immediately. In other words, this is what shareholders would theoretically receive if a company liquidates all its assets after paying off all its liabilities.
It is calculated by subtracting total liabilities from the total assets of a company. In most cases, this equates to the common stockholders’ equity on the balance sheet. However, depending on the company’s balance sheet, intangible assets should also be subtracted from the total assets to determine book value.
Understanding P/B Ratio
By comparing the book value of equity to its market price, we get an idea of whether a company is under-or overpriced. However, like P/E or P/S ratio, it is always better to compare P/B ratios within industries.
A P/B ratio of less than one means that the stock is trading at less than its book value, or the stock is undervalued and, therefore a good buy. Conversely, a stock with a ratio greater than one can be interpreted as being overvalued or relatively expensive.
For example, a stock with a P/B ratio of 2 means that we pay $2 for every $1 of book value. Thus, the higher the P/B, the more expensive the stock.
But there is a caveat. A P/B ratio of less than one can also mean that the company is earning weak or even negative returns on its assets or that the assets are overstated, in which case the stock should be shunned because it may be destroying shareholder value. Conversely, the stock’s price may be significantly high — thereby pushing the P/B ratio to more than one — in the likely case that it has become a takeover target, a good enough reason to own the stock.
Moreover, the P/B ratio isn't without limitations. It is useful for businesses — like finance, investments, insurance, and banking or manufacturing companies — with many liquid/tangible assets on the books. However, it can be misleading for firms with significant R&D expenditure, high debt, service companies, or those with negative earnings.
In any case, the ratio is not particularly relevant as a standalone number. One should analyze other ratios like P/E, P/S and debt to equity before arriving at a reasonable investment decision.
Here are our five picks out of the 10 stocks that qualified the screening:
Headquartered in Frankfurt am Main, Deutsche Bank Aktiengesellschaft, also called Deutsche Bank AG, is the largest bank in Germany and one of the largest financial institutions in Europe and the world, as measured by total assets. It offers a wide variety of investment, financial and related products and services
Deutsche Bank has a Zacks Rank #1 and a Value Score of B. You can see the complete list of today’s Zacks #1 Rank stocks here.
Deutsche Bank has a projected 3–5 year EPS growth rate of 8.92%.
Signet Jewelers is a retailer of diamond jewelry, watches as well as other products. The company operates in the United States, Canada, the U.K., the Republic of Ireland and the Channel Islands.
Signet Jewelers has a projected 3–5-year EPS growth rate of 8%. SIG currently has a Zacks Rank #1 and a Value Score of B.
Based in Houston, TX, Phillips 66's operations incorporate refining, midstream, marketing and specialties, and chemicals. The company’s operations include processing, transportation, storing and marketing fuels and products all over the world.
Phillips 66 has a Zacks Rank #2 and a Value Score of A. PSX has a projected 3–5 year EPS growth rate of 18.15%.
Acco Brands is a world leader in branded office products. Its industry-leading brands include Swingline, Kensington, Wilson Jones, Quartet, GBC and Day-Timer, among others. Under the GBC brand, the company is also a leader in the professional printing market
Acco Brands currently carries a Zacks Rank #2 and has a Value Score of A. It also has an impressive five-year expected growth rate of 12.0%.
Sterling Infrastructure operates through subsidiaries within segments specializing in E-Infrastructure, Building and Transportation Solutions. E-Infrastructure Solutions projects develop advanced, large-scale site development systems and services for data centers, e-commerce distribution centers, warehousing, transportation, energy and more.
Building Solutions projects include residential and commercial concrete foundations for single-family and multi-family homes,parking structures, elevated slabs and other concrete work. Transportation Solutions includes infrastructure and rehabilitation projects for highways, roads, bridges, airports, ports, light rail, water, wastewater and storm drainage systems.
Sterling Infrastructure has a projected 3-5-year EPS growth rate of 18%. Sterling Infrastructure currently has a Zacks Rank #2 and a Value Score of A.
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For the rest of this Screen of the Week article please visit Zacks.com at: https://www.zacks.com/stock/news/2050182/5-promising-price-to-book-value-stocks-to-buy-in-february
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Deutsche Bank Aktiengesellschaft (DB) : Free Stock Analysis Report
Signet Jewelers Limited (SIG) : Free Stock Analysis Report
Phillips 66 (PSX) : Free Stock Analysis Report
Acco Brands Corporation (ACCO) : Free Stock Analysis Report
Sterling Infrastructure, Inc. (STRL) : Free Stock Analysis Report
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