Advertisement
UK markets open in 4 hours 3 minutes

  • NIKKEI 225

    38,090.87
    +129.07 (+0.34%)
     

  • HANG SENG

    16,494.99
    +243.15 (+1.50%)
     

  • CRUDE OIL

    82.88
    +0.19 (+0.23%)
     

  • GOLD FUTURES

    2,388.60
    +0.20 (+0.01%)
     

  • DOW

    37,753.31
    -45.66 (-0.12%)
     

  • Bitcoin GBP

    49,471.59
    -1,733.27 (-3.38%)
     

  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     

  • NASDAQ Composite

    15,683.37
    -181.88 (-1.15%)
     

  • UK FTSE All Share

    4,273.02
    +12.61 (+0.30%)
     
Money:

5 ways to get help with childcare costs

Childcare is eye-wateringly expensive, here are some ways to save money

Zacks.com featured highlights include MarineMax, Huntsman, PBF Energy, Ryder System, and Daqo New Energy

Zacks Equity Research
·8-min read

For Immediate Release

Chicago, IL – May 5, 2022 – Stocks in this week’s article are MarineMax, Inc. HZO, Huntsman Corp. HUN, PBF Energy Inc. PBF, Ryder System, Inc. R and Daqo New Energy Corp. DQ.

5 Value Stocks with Exciting EV-to-EBITDA Ratios to Own Now

The price-to-earnings (P/E) ratio is broadly considered by investors as the yardstick for evaluating the fair market value of a stock. It is preferred by many investors while handpicking stocks trading at attractive prices. However, even this universally used valuation multiple is not without its limitations.

Although 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.

ADVERTISEMENT

MarineMax, Inc., Huntsman Corp., PBF Energy Inc., Ryder System, Inc., and Daqo New Energy Corp. are some stocks with attractive EV-to-EBITDA ratios.

EV-to-EBITDA is a Better Option, Here's Why

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.

Just like P/E, the lower the EV-to-EBITDA ratio, the more attractive it is. A low EV-to-EBITDA ratio could signal that a stock is potentially undervalued.

Unlike the P/E ratio, EV-to-EBITDA takes debt on a company's balance sheet into account. For this reason, it is typically used to value potential acquisition targets. The ratio shows the amount of debt that the acquirer has to bear. Stocks flaunting a low EV-to-EBITDA multiple could be seen as attractive takeover candidates.

Moreover, P/E can't be used to value a loss-making firm. A firm's earnings are also subject to accounting estimates and management manipulation. In contrast, EV-to-EBITDA is harder to manipulate and can be used to value companies that have negative net earnings but are positive on the EBITDA front.

EV-to-EBITDA is also a useful tool 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.

But EV-to-EBITDA has its limitations too. The ratio varies across industries (a high-growth industry typically has a higher multiple and vice versa) and is usually not appropriate while comparing stocks in different industries, given their diverse capital requirements.

Therefore, instead of just relying on EV-to-EBITDA, you can club it with the other major ratios such as price-to-book (P/B), P/E and price-to-sales (P/S) to achieve the desired results.

Here are our five picks out of the 23 stocks that passed the screen:

MarineMax is a leading recreational boat and yacht retailer. This Zacks Rank #1 stock has a Value Score of A.

MarineMax has an expected year-over-year earnings growth rate of 21.8% for the current fiscal year. The Zacks Consensus Estimate for HZO's current fiscal year earnings has been revised 4.8% upward over the last 60 days.

Huntsman is a leading manufacturer of differentiated and commodity chemical products. This Zacks Rank #1 stock has a Value Score of A. You can see the complete list of today's Zacks #1 Rank stocks here.

Huntsman has an expected earnings growth rate of 20.1% for the current year. The Zacks Consensus Estimate for HUN's current-year earnings has been revised 6.5% upward over the past 60 days.

PBF Energy provides end products that comprise heating oil, transportation fuels, lubricants and many related products. This Zacks Rank #1 stock has a Value Score of A.

PBF Energy has an expected earnings growth rate of 318.4% for the current year. The consensus estimate for PBF's current-year earnings has been revised 215.6% upward over the past 60 days.

Ryder System is one of the world's largest providers of integrated logistics and transportation solutions. This Zacks Rank #1 stock has a Value Score of A.

Ryder System has an expected earnings growth rate of 40.8% for the current year. The Zacks Consensus Estimate for R's current-year earnings has been revised 15.8% upward over the past 60 days.

Daqo New Energy is a leading producer of high-purity polysilicon. This Zacks Rank #1 stock has a Value Score of A.

Daqo New Energy has an expected earnings growth rate of 89.6% for the current year. The Zacks Consensus Estimate for DQ's current-year earnings has been revised 10.7% upward over the past 60 days.

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/1915190/5-value-stocks-with-exciting-ev-to-ebitda-ratios-to-own-now

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.

About Screen of the Week

Zacks.com created the first and best screening system on the web earning the distinction as the "#1 site for screening stocks" by Money Magazine.  But powerful screening tools is just the start. That is why Zacks created the Screen of the Week to highlight profitable stock picking strategies that investors can actively use.

Strong Stocks that Should Be in the News

Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has more than doubled the market from 1988 through 2016. Its average gain has been a stellar +25% per year. See these high-potential stocks free >>.

Follow us on Twitter:  https://www.twitter.com/zacksresearch

Join us on Facebook:  https://www.facebook.com/ZacksInvestmentResearch

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/performancefor information about the performance numbers displayed in this press release.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Ryder System, Inc. (R) : Free Stock Analysis Report
 
Huntsman Corporation (HUN) : Free Stock Analysis Report
 
MarineMax, Inc. (HZO) : Free Stock Analysis Report
 
PBF Energy Inc. (PBF) : Free Stock Analysis Report
 
DAQO New Energy Corp. (DQ) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research