Do you consider yourself a value investor?
We screened the consumer goods sector for stocks that appear undervalued relative to their cash flows, indicated by high ratios of levered free cash flow/enterprise value.
Levered free cash flow is the free cash flow after deducting interest payments on outstanding debt. Enterprise value is the sum of the firm's value from all ownership sources: market cap, outstanding debt, and preferred shares. When companies have ratios of levered free cash flow/enterprise value in excess of 10%, it may indicate that the company as a whole is being undervalued.
We also screened for stocks that appear to be undervalued relative to earnings growth, with PEG below 1.
For an interactive version of this chart, click on the image below. Analyst ratings sourced from Zacks Investment Research.
Do you think these stocks should be trading higher? Use this list as a starting point for your own analysis.
List sorted by LFCF/EV.
1. Dana Holding Corporation (DAN): Engages in the design, manufacture, and supply of products for vehicle manufacturers worldwide. Market cap at $2.23B, most recent closing price at $15.03. Levered free cash flow at $305.62M vs. enterprise value at $2.08B (implies a LFCF/EV ratio at 14.69%). PEG at 0.89.
2. Cooper Tire & Rubber Co. (CTB): Together with its subsidiaries, manufactures and markets replacement tires in North America and internationally. Market cap at $1.59B, most recent closing price at $25.26. Levered free cash flow at $214.53M vs. enterprise value at $1.63B (implies a LFCF/EV ratio at 13.16%). PEG at 0.68.
3. Goodyear Tire & Rubber Co. (GT): Engages in the development, manufacture, distribution, and sale of tires, and related products and services to consumer and commercial customers worldwide. Market cap at $3.32B, most recent closing price at $13.56. Levered free cash flow at $829.12M vs. enterprise value at $6.90B (implies a LFCF/EV ratio at 12.02%). PEG at 0.62.
*LFCF data sourced from Yahoo! Finance, all other data sourced from Finviz.