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One helpful measure of profitability is EBITDA/common equity (where EBITDA stands for earnings before interest, taxes, depreciation, and amortization). Dividing by common equity gives profitability as a return to shareholder investment, and it standardizes the number for comparison across firms of different sizes. Increases in the ratio over time indicate increasing profitability.

We ran a screen on highly undervalued stocks, with lower TTM P/E, TTM P/CF, and PEG than their industry averages. We screened these stocks for those with impressive profitability growth, comparing the TTM EBITDA/common equity to the company’s five-year average. To control for low interest payments that are not reflected in EBITDA, we also screened for increases in interest coverage (EBIT/interest expense) year-over-year.

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.



Do you think these stocks are undervalued? Use this list as a starting-off point for your own analysis.
List sorted by market cap.

1. International Business Machines Corp. (NYSE:IBM): Diversified Computer Systems Industry. Market cap of $189.87B. TTM P/E at 12.91 vs. industry average at 15.62. PEG at 1.09 vs. industry average at 1.11. TTM P/CF at 9.57 vs. industry average at 12.47. TTM EBITDA/common equity at 1.09 vs. 5-year average at 0.84. TTM interest coverage at 66.16 vs. prior-TTM interest coverage at 39.45. It's been a rough couple of days for the stock, losing 8.1% over the last week.

2. Boeing Co. (NYSE:BA): Aerospace/Defense Products & Services Industry. Market cap of $43.26B. TTM P/E at 12.39 vs. industry average at 14.83. PEG at 1.03 vs. industry average at 1.29. TTM P/CF at 8.25 vs. industry average at 9.18. TTM EBITDA/common equity at 1.64 vs. 5-year average at 1.16. TTM interest coverage at 22.37 vs. prior-TTM interest coverage at 8.99. It's been a rough couple of days for the stock, losing 6.89% over the last week.

3. CSX Corp. (NYSE:CSX): Railroads Industry. Market cap of $22.11B. TTM P/E at 13.0 vs. industry average at 15.14. PEG at 0.83 vs. industry average at 1.08. TTM P/CF at 8.21 vs. industry average at 8.52. TTM EBITDA/common equity at 0.50 vs. 5-year average at 0.40. TTM interest coverage at 6.13 vs. prior-TTM interest coverage at 4.71. It's been a rough couple of days for the stock, losing 12.14% over the last week.

4. Northrop Grumman Corporation (NYSE:NOC):
Aerospace/Defense Diversified Industry. Market cap of $13.91B. TTM P/E at 7.83 vs. industry average at 15.01. PEG at 0.99 vs. industry average at 1.30. TTM P/CF at 5.81 vs. industry average at 9.23. TTM EBITDA/common equity at 0.31 vs. 5-year average at 0.19. TTM interest coverage at 13.28 vs. prior-TTM interest coverage at 9.57. The stock is a short squeeze candidate, with a short float at 6.34% (equivalent to 5.36 days of average volume). It's been a rough couple of days for the stock, losing 5.69% over the last week.

5. PPG Industries Inc. (NYSE:PPG): Specialty Chemicals Industry. Market cap of $10.86B. TTM P/E at 10.87 vs. industry average at 12.43. PEG at 0.97 vs. industry average at 1.29. TTM P/CF at 7.32 vs. industry average at 10.46. TTM EBITDA/common equity at 0.59 vs. 5-year average at 0.45. TTM interest coverage at 8.42 vs. prior-TTM interest coverage at 6.84. It's been a rough couple of days for the stock, losing 10.02% over the last week.

6. KLA-Tencor Corporation (NASDAQ:KLAC): Semiconductor Equipment & Materials Industry. Market cap of $5.65B. TTM P/E at 7.27 vs. industry average at 14.22. PEG at 0.77 vs. industry average at 0.99. TTM P/CF at 6.43 vs. industry average at 12.22. TTM EBITDA/common equity at 0.49 vs. 5-year average at 0.17. TTM interest coverage at 23.08 vs. prior-TTM interest coverage at 13.67. It's been a rough couple of days for the stock, losing 8.52% over the last week.

7. Eastman Chemical Co. (NYSE:EMN): Chemicals Diversified Industry. Market cap of $5.26B. TTM P/E at 9.54 vs. industry average at 12.43. PEG at 1.27 vs. industry average at 1.29. TTM P/CF at 6.27 vs. industry average at 10.46. TTM EBITDA/common equity at 0.66 vs. 5-year average at 0.48. TTM interest coverage at 12.19 vs. prior-TTM interest coverage at 6.78. It's been a rough couple of days for the stock, losing 13.09% over the last week.

8. Albemarle Corp. (NYSE:ALB): Specialty Chemicals Industry. Market cap of $4.18B. TTM P/E at 10.56 vs. industry average at 12.37. PEG at 0.99 vs. industry average at 1.29. TTM P/CF at 8.46 vs. industry average at 10.52. TTM EBITDA/common equity at 0.41 vs. 5-year average at 0.32. TTM interest coverage at 16.12 vs. prior-TTM interest coverage at 12.81. It's been a rough couple of days for the stock, losing 23.28% over the last week.

9. Flextronics International Ltd. (NASDAQ:FLEX): Printed Circuit Boards Industry. Market cap of $3.73B. TTM P/E at 6.54 vs. industry average at 11.81. PEG at 0.45 vs. industry average at 0.91. TTM P/CF at 3.55 vs. industry average at 4.50. TTM EBITDA/common equity at 0.56 vs. 5-year average at -0.10. TTM interest coverage at 10.01 vs. prior-TTM interest coverage at 2.89. This is a risky stock that is significantly more volatile than the overall market (beta = 2.27). It's been a rough couple of days for the stock, losing 10.68% over the last week.

10. Timken Co. (NYSE:TKR): Machine Tools & Accessories Industry. Market cap of $3.25B. TTM P/E at 8.39 vs. industry average at 13.14. PEG at 0.54 vs. industry average at 1.34. TTM P/CF at 5.58 vs. industry average at 7.92. TTM EBITDA/common equity at 0.41 vs. 5-year average at 0.29. TTM interest coverage at 18.41 vs. prior-TTM interest coverage at 4.37. It's been a rough couple of days for the stock, losing 15.4% over the last week.

11. Jabil Circuit Inc. (NYSE:JBL): Printed Circuit Boards Industry. Market cap of $3.09B. TTM P/E at 9.54 vs. industry average at 11.8. PEG at 0.49 vs. industry average at 0.92. TTM P/CF at 4.76 vs. industry average at 5.20. TTM EBITDA/common equity at 0.48 vs. 5-year average at 0.13. TTM interest coverage at 5.78 vs. prior-TTM interest coverage at 3.58. This is a risky stock that is significantly more volatile than the overall market (beta = 2.11). It's been a rough couple of days for the stock, losing 15.09% over the last week.

12. Westlake Chemical Corp. (NYSE:WLK): Specialty Chemicals Industry. Market cap of $2.54B. TTM P/E at 8.18 vs. industry average at 12.54. PEG at 1.17 vs. industry average at 1.29. TTM P/CF at 6.05 vs. industry average at 10.58. TTM EBITDA/common equity at 0.44 vs. 5-year average at 0.24. TTM interest coverage at 10.90 vs. prior-TTM interest coverage at 5.86. The stock is a short squeeze candidate, with a short float at 15.16% (equivalent to 5.14 days of average volume). It's been a rough couple of days for the stock, losing 12.02% over the last week.

13. Kennametal Inc. (NYSE:KMT):
Machine Tools & Accessories Industry. Market cap of $2.52B. TTM P/E at 11.30 vs. industry average at 13.16. PEG at 0.73 vs. industry average at 1.34. TTM P/CF at 7.86 vs. industry average at 8.01. TTM EBITDA/common equity at 0.28 vs. 5-year average at 0.18. TTM interest coverage at 12.60 vs. prior-TTM interest coverage at 5.61. It's been a rough couple of days for the stock, losing 12.75% over the last week.

14. Cadence Design Systems Inc. (NASDAQ:CDNS): Application Software Industry. Market cap of $2.23B. TTM P/E at 18.04 vs. industry average at 36.91. PEG at 1.03 vs. industry average at 1.05. TTM P/CF at 10.29 vs. industry average at 23.29. TTM EBITDA/common equity at 0.43 vs. 5-year average at -0.13. TTM interest coverage at 0.43 vs. prior-TTM interest coverage at -2.31. The stock is a short squeeze candidate, with a short float at 7.55% (equivalent to 6.04 days of average volume). It's been a rough couple of days for the stock, losing 11.7% over the last week.

15. AMERIGROUP Corporation (AGP):
Health Care Plans Industry. Market cap of $2.16B. TTM P/E at 7.94 vs. industry average at 14.02. PEG at 0.64 vs. industry average at 1.04. TTM P/CF at 6.67 vs. industry average at 9.06. TTM EBITDA/common equity at 0.43 vs. 5-year average at 0.29. TTM interest coverage at 28.16 vs. prior-TTM interest coverage at 18.33. It's been a rough couple of days for the stock, losing 6.7% over the last week.

16. Cabot Corp. (NYSE:CBT): Specialty Chemicals Industry. Market cap of $1.91B. TTM P/E at 8.76 vs. industry average at 12.37. PEG at 0.88 vs. industry average at 1.29. TTM P/CF at 5.30 vs. industry average at 10.52. TTM EBITDA/common equity at 0.33 vs. 5-year average at 0.24. TTM interest coverage at 7.97 vs. prior-TTM interest coverage at 5.46. It's been a rough couple of days for the stock, losing 14.47% over the last week.

17. Alaska Air Group, Inc. (NYSE:ALK): Regional Airlines Industry. Market cap of $1.90B. TTM P/E at 6.71 vs. industry average at 10.76. PEG at 1.12 vs. industry average at 2.16. TTM P/CF at 3.59 vs. industry average at 5.53. TTM EBITDA/common equity at 0.71 vs. 5-year average at 0.38. TTM interest coverage at 8.08 vs. prior-TTM interest coverage at 5.25. It's been a rough couple of days for the stock, losing 8.16% over the last week.

18. The Cheesecake Factory Incorporated (NASDAQ:CAKE):
Restaurants Industry. Market cap of $1.50B. TTM P/E at 17.72 vs. industry average at 39.92. PEG at 1.24 vs. industry average at 1.63. TTM P/CF at 9.66 vs. industry average at 12.95. TTM EBITDA/common equity at 0.36 vs. 5-year average at 0.30. TTM interest coverage at 22.59 vs. prior-TTM interest coverage at 3.82. The stock is a short squeeze candidate, with a short float at 15.63% (equivalent to 6.39 days of average volume). The stock has performed poorly over the last month, losing 14.54%.

19. Penske Automotive Group, Inc. (NYSE:PAG): Auto Dealerships Industry. Market cap of $1.46B. TTM P/E at 10.53 vs. industry average at 14.41. PEG at 0.64 vs. industry average at 1.05. TTM P/CF at 7.81 vs. industry average at 10.09. TTM EBITDA/common equity at 0.30 vs. 5-year average at 0.17. TTM interest coverage at 4.52 vs. prior-TTM interest coverage at 2.91. This is a risky stock that is significantly more volatile than the overall market (beta = 2.06). The stock is a short squeeze candidate, with a short float at 9.32% (equivalent to 7.66 days of average volume). It's been a rough couple of days for the stock, losing 12.73% over the last week.

20. OmniVision Technologies Inc. (NASDAQ:OVTI): Semiconductor Industry. Market cap of $1.41B. TTM P/E at 11.18 vs. industry average at 13.91. PEG at 0.75 vs. industry average at 1.01. TTM P/CF at 9.08 vs. industry average at 12.27. TTM EBITDA/common equity at 0.23 vs. 5-year average at 0.11. TTM interest coverage at 109.48 vs. prior-TTM interest coverage at 8.38. It's been a rough couple of days for the stock, losing 13.33% over the last week.

21. Finisar Corp. (NASDAQ:FNSR):
Networking & Communication Devices Industry. Market cap of $1.36B. TTM P/E at 14.83 vs. industry average at 19.9. PEG at 0.53 vs. industry average at 1.31. TTM P/CF at 9.61 vs. industry average at 10.59. TTM EBITDA/common equity at 0.28 vs. 5-year average at -0.04. TTM interest coverage at 17.72 vs. prior-TTM interest coverage at -1.56. This is a risky stock that is significantly more volatile than the overall market (beta = 2.8). It's been a rough couple of days for the stock, losing 13.34% over the last week.

22. ViroPharma Inc. (VPHM): Biotechnology Industry. Market cap of $1.30B. TTM P/E at 11.01 vs. industry average at 15.27. PEG at 3.07 vs. industry average at 3.46. TTM P/CF at 7.90 vs. industry average at 14.42. TTM EBITDA/common equity at 0.30 vs. 5-year average at 0.21. TTM interest coverage at 19.78 vs. prior-TTM interest coverage at 14.32. The stock is a short squeeze candidate, with a short float at 9.06% (equivalent to 7.79 days of average volume). It's been a rough couple of days for the stock, losing 8.13% over the last week.

23. Coinstar Inc. (CSTR): Specialty Retail, Other Industry. Market cap of $1.24B. TTM P/E at 14.46 vs. industry average at 16.98. PEG at 0.76 vs. industry average at 1.52. TTM P/CF at 5.69 vs. industry average at 12.68. TTM EBITDA/common equity at 0.67 vs. 5-year average at 0.47. TTM interest coverage at 6.0 vs. prior-TTM interest coverage at 2.97. The stock is a short squeeze candidate, with a short float at 34.27% (equivalent to 9.3 days of average volume). It's been a rough couple of days for the stock, losing 7.44% over the last week.

*EBITDA/common equity and interest coverage data sourced from Screener.co, price multiples source from Fidelity, 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.

Source: 23 Highly Undervalued Stocks With Impressive Profitability Growth