Yahoo Finance Zacks.com featured highlights PVH, Signet Jewelers, Unum Group, Aercap and Sterling Infrastructure
For Immediate Release
Chicago, IL – January 3, 2023 – Stocks in this week’s article are PVH Corp. PVH, Signet Jewelers SIG, Unum Group UNM, Aercap AER and Sterling Infrastructure STRL.
5 Low Price-to-Book Stocks to Buy in the New Year
Value investors have, over the years, preferred price-to-earnings ratio or P/E as a means to identify value stocks. However, in the case of loss-making companies that have a negative price-to-earnings ratio, the price-to-sales or P/S ratio is considered in determining their true value.
However, the price-to-book ratio (P/B ratio), though used less often, is also an easy-to-use valuation tool for identifying low-priced stocks with great returns.
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. PVH Corp., Signet Jewelers, Unum Group, Aercap 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:
PVH Corp. specializes in designing and marketing branded dress shirts, neckwear, sportswear, jeanswear, intimate apparel, swim products, footwear, handbags and related products.
PVH Corp. has a Zacks Rank #2 and a Value Score of A. You can see the complete list of today’s Zacks #1 Rank stocks here.
PVH Corp. has a projected 3–5 year EPS growth rate of 10.22%.
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.
Unum Group was created following the June 1999 merger of Provident Companies and Unum Corporation. Along with disability insurance, the company provides long-term care insurance, life insurance, employer- and employee-paid group benefits and related services.
Unum Group has a Zacks Rank #2 and a Value Score of A. Unum Group has a projected 3–5 year EPS growth rate of 12.24%.
AerCap is the global leader in aviation leasing with an attractive order book in the industry. AerCap serves approximately 300 customers around the world with its comprehensive fleet solutions.
AerCap currently carries a Zacks Rank #2 and has a Value Score of A. It also has an impressive five-year expected growth rate of 8.2%.
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 #1 and a Value Score of B.
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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/2033853/5-low-price-to-book-stocks-to-buy-in-the-new-year
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Unum Group (UNM) : Free Stock Analysis Report
Signet Jewelers Limited (SIG) : Free Stock Analysis Report
PVH Corp. (PVH) : Free Stock Analysis Report
Sterling Infrastructure, Inc. (STRL) : Free Stock Analysis Report
Aercap Holdings N.V. (AER) : Free Stock Analysis Report
