15 Highly Profitable Companies Undervalued to Target Price

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 |  Includes: APD, BBBY, BEAV, DLTR, ENIA, ESL, GEOS, GR, MON, PKG, PLKI, RBN, ROLL, UNH, UNP
by: Kapitall

One way to search for undervalued stocks is to find profitable companies that have not yet priced in their firm’s target price.

To create this list we first ran a screen for rallying stocks – those performing above their 20, 50, and 200-day Market Average. Market caps above $300M.

We then searched within the resulting 500 companies for those that are trading at a steep discount (above 10%) to analyst target price (used as a proxy for fair value). We were left with 150 names.

Finally, we searched the list for companies that are more profitable than their industry competitors on the basis of Trailing Twelve Month (TTM) gross margin, TTM operating margin, and TTM pretax margin. We were left with the 15 companies listed below.

Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the top six stocks mentioned below. Analyst ratings sourced from Zacks Investment Research.


We also created a price-weighted index of the stocks mentioned below, and monitored the performance of the list relative to the S&P 500 index over the last month. To access a complete analysis of this list's recent performance, click here.


Although target price is known to suffer from an upward bias, whenever a stock is trading at a steep discount from its target price it may indicate that it is undervalued.

Do you think these stocks fully priced in their companies’ profitability? Use this list as a starting-off point for your own analysis

List sorted by discount to target price.

1. Enersis S.A. (ENI): Foreign Utilities Industry. Market cap of $14.20B. Target price at $30.02 vs. current price at $21.89 (implies a discount of 37.14%). Gross margin (TTM) at 32.93% vs. industry avg. of 27.43%. Operating margin (TTM) at 26.38% vs. industry avg. of 18.99%. Pretax margin (TTM) at 21.28% vs. industry avg. of 14.13%. The stock has gained 13.16% over the last year.

2. OYO Geospace Corp. (OYOG):
Scientific & Technical Instruments Industry. Market cap of $600.58M. Target price at $133.5 vs. current price at $98.08 (implies a discount of 36.11%). Gross margin (TTM) at 46.35% vs. industry avg. of 35.18%. Operating margin (TTM) at 24.18% vs. industry avg. of 17.81%. Pretax margin (TTM) at 24.19% vs. industry avg. of 15.77%. The stock has had a couple of great days, gaining 7.18% over the last week.

3. BE Aerospace Inc. (NASDAQ:BEAV):
Aerospace/Defense Products & Services Industry. Market cap of $3.77B. Target price at $44.17 vs. current price at $37.3 (implies a discount of 18.42%). Gross margin (TTM) at 39.17% vs. industry avg. of 25.62%. Operating margin (TTM) at 16.66% vs. industry avg. of 11.57%. Pretax margin (TTM) at 11.04% vs. industry avg. of 6.75%. The stock has gained 43.15% over the last year.

4. Goodrich Corp. (NYSE:GR):
Aerospace/Defense Products & Services Industry. Market cap of $10.81B. Target price at $104.29 vs. current price at $88.61 (implies a discount of 17.7%). Gross margin (TTM) at 34.92% vs. industry avg. of 25.62%. Operating margin (TTM) at 15.03% vs. industry avg. of 11.57%. Pretax margin (TTM) at 12.33% vs. industry avg. of 6.75%. The stock has gained 27.93% over the last year.

5. Robbins & Myers Inc. (NYSE:RBN):
Diversified Machinery Industry. Market cap of $1.87B. Target price at $49.64 vs. current price at $42.45 (implies a discount of 16.94%). Gross margin (TTM) at 38.33% vs. industry avg. of 34.06%. Operating margin (TTM) at 13.81% vs. industry avg. of 12.69%. Pretax margin (TTM) at 10.96% vs. industry avg. of 10.76%. The stock has gained 88.77% over the last year.

6. Air Products & Chemicals Inc. (NYSE:APD):
Chemicals Industry. Market cap of $19.56B. Target price at $107.56 vs. current price at $93.27 (implies a discount of 15.32%). Gross margin (TTM) at 37.1% vs. industry avg. of 36.26%. Operating margin (TTM) at 16.48% vs. industry avg. of 15.12%. Pretax margin (TTM) at 15.69% vs. industry avg. of 14.16%. The stock has gained 37.15% over the last year.

7. RBC Bearings Inc. (NASDAQ:ROLL):
Machine Tools & Accessories Industry. Market cap of $829.67M. Target price at $44.4 vs. current price at $38.5 (implies a discount of 15.32%). Gross margin (TTM) at 36.15% vs. industry avg. of 34.06%. Operating margin (TTM) at 16.49% vs. industry avg. of 12.69%. Pretax margin (TTM) at 15.75% vs. industry avg. of 10.76%. The stock has gained 26.8% over the last year.

8. Esterline Technologies Corp. (NYSE:ESL):
Aerospace/Defense Products & Services Industry. Market cap of $2.21B. Target price at $85.18 vs. current price at $74.08 (implies a discount of 14.98%). Gross margin (TTM) at 38.2% vs. industry avg. of 25.71%. Operating margin (TTM) at 14.4% vs. industry avg. of 11.64%. Pretax margin (TTM) at 12.12% vs. industry avg. of 7.14%. The stock has gained 43.% over the last year.

9. Unitedhealth Group, Inc. (NYSE:UNH):
Health Care Plans Industry. Market cap of $53.21B. Target price at $57.09 vs. current price at $49.78 (implies a discount of 14.68%). Gross margin (TTM) at 24.66% vs. industry avg. of 20.87%. Operating margin (TTM) at 8.58% vs. industry avg. of 8.5%. Pretax margin (TTM) at 7.88% vs. industry avg. of 6.75%. The stock has gained 62.67% over the last year.

10. Packaging Corp. of America (NYSE:PKG):
Packaging & Containers Industry. Market cap of $2.91B. Target price at $33.25 vs. current price at $29.03 (implies a discount of 14.54%). Gross margin (TTM) at 29.39% vs. industry avg. of 23.54%. Operating margin (TTM) at 13.32% vs. industry avg. of 10.46%. Pretax margin (TTM) at 7.45% vs. industry avg. of 7.17%. The stock has had a couple of great days, gaining 7.13% over the last week.

11. AFC Enterprises Inc. (AFCE): Restaurants Industry. Market cap of $391.21M. Target price at $18.25 vs. current price at $16.11 (implies a discount of 13.28%). Gross margin (TTM) at 70.62% vs. industry avg. of 36.88%. Operating margin (TTM) at 27.64% vs. industry avg. of 18.44%. Pretax margin (TTM) at 23.56% vs. industry avg. of 15.98%. The stock has gained 58.16% over the last year.

12. Bed Bath & Beyond, Inc. (NASDAQ:BBBY):
Home Furnishing Stores Industry. Market cap of $13.26B. Target price at $61.19 vs. current price at $54.6 (implies a discount of 12.07%). Gross margin (TTM) at 41.36% vs. industry avg. of 38.23%. Operating margin (TTM) at 14.71% vs. industry avg. of 9.73%. Pretax margin (TTM) at 14.76% vs. industry avg. of 9.18%. The stock has gained 18.56% over the last year.

13. Monsanto Co. (NYSE:MON): Agricultural Chemicals Industry. Market cap of $36.82B. Target price at $76.82 vs. current price at $69.1 (implies a discount of 11.17%). Gross margin (TTM) at 55.66% vs. industry avg. of 36.23%. Operating margin (TTM) at 19.72% vs. industry avg. of 15.13%. Pretax margin (TTM) at 16.29% vs. industry avg. of 14.2%. The stock has gained 40.15% over the last year.

14. Union Pacific Corporation (NYSE:UNP):
Railroads Industry. Market cap of $49.37B. Target price at $113.14 vs. current price at $101.78 (implies a discount of 11.16%). Gross margin (TTM) at 37.99% vs. industry avg. of 36.49%. Operating margin (TTM) at 29.33% vs. industry avg. of 25.96%. Pretax margin (TTM) at 26.36% vs. industry avg. of 22.63%. The stock has gained 40.79% over the last year.

15. Dollar Tree, Inc. (NASDAQ:DLTR):
Discount, Variety Stores Industry. Market cap of $7.63B. Target price at $69.73 vs. current price at $63 (implies a discount of 10.68%). Gross margin (TTM) at 38.48% vs. industry avg. of 35.46%. Operating margin (TTM) at 11.34% vs. industry avg. of 7.95%. Pretax margin (TTM) at 11.35% vs. industry avg. of 6.85%. The stock has gained 49.07% over the last year.

*Profitability data sourced from Fidelity, target price and all other data sourced from Finviz.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.