Analysts and investors follow potential takeover/leveraged buyout (LBO) targets because when a company announces that it is being taken over, its stock price usually jumps to reflect the takeover premium being paid. This is usually a very profitable event for shareholders.
One of the biggest considerations companies make in acquisitions is the company's price, whether the company is overvalued or undervalued. We compiled a list of potential rumored takeover/LBO targets from various sources including iStockAnalyst and Bloomberg Businessweek for those that appear undervalued relative to EPS trends.
Based on the theory that P/E is equal to a constant k, changes in EPS should be matched by proportionate increases in price. When they don't match up, a mispricing may have occurred. That is, if EPS rises faster than price, there may be more value left to price in.
Interactive Chart: Press Play to compare changes in market cap over the last two years for the top six stocks mentioned below. Analyst ratings sourced from Zacks Investment Research.
Do you think these companies are attractive takeover targets? Use this list as a starting point for your own analysis.
1. AMERIGROUP Corporation (AGP): Operates as a multi-state managed healthcare company. Takeover/LBO rumor sourced from iStockAnalyst. The EPS estimate for the company's current year increased from 3.97 to 3.99 over the last 30 days, an increase of 0.5%. This increase came during a time when the stock price changed by -8.86% (from 70.17 to 63.95 over the last 30 days).
2. Akamai Technologies Inc. (AKAM): Provides services for accelerating and improving the delivery of content and applications over the Internet in the United States and internationally. Takeover/LBO rumor sourced from Seeking Alpha. The EPS estimate for the company's current year increased from 1.64 to 1.65 over the last 30 days, an increase of 0.61%. This increase came during a time when the stock price changed by -1.82% (from 37.43 to 36.75 over the last 30 days).
3. Seacor Holdings Inc. (CKH): Operates, invests in, and markets equipment for the offshore oil and gas, industrial aviation, and marine transportation industries worldwide. Takeover/LBO rumor sourced from Bloomberg Businessweek. The EPS estimate for the company's current year increased from 5.97 to 5.99 over the last 30 days, an increase of 0.34%. This increase came during a time when the stock price changed by -2.91% (from 98.84 to 95.96 over the last 30 days).
4. Energy XXI (Bermuda) Limited (EXXI): Engages in the acquisition, exploration, development, and operation of oil and natural gas properties onshore in Louisiana and Texas and offshore in the Gulf of Mexico. Takeover/LBO rumor sourced from Seeking Alpha. The EPS estimate for the company's current year increased from 3.81 to 3.92 over the last 30 days, an increase of 2.89%. This increase came during a time when the stock price changed by -6.18% (from 38.52 to 36.14 over the last 30 days).
5. Jack in the Box Inc. (JACK): Operates as a restaurant company that operates and franchises Jack in the Box restaurants. Takeover/LBO rumor sourced from The Stock Masters. The EPS estimate for the company's current year increased from 1.31 to 1.33 over the last 30 days, an increase of 1.53%. This increase came during a time when the stock price changed by 0.85% (from 23.56 to 23.76 over the last 30 days).
6. Marvell Technology Group Ltd. (MRVL): Designs, develops, and markets analog, mixed-signal, digital signal processing, and embedded and standalone ARM-based microprocessor integrated circuits. Takeover/LBO rumor sourced from CNBC. The EPS estimate for the company's current year increased from 1.17 to 1.2 over the last 30 days, an increase of 2.56%. This increase came during a time when the stock price changed by -1.5% (from 16 to 15.76 over the last 30 days).
7. Power Integrations Inc. (POWI): Designs, develops, manufactures, and markets proprietary, high-voltage, analog, and mixed-signal integrated circuits in the United States and internationally. Takeover/LBO rumor sourced from EE Times. The EPS estimate for the company's current year increased from 1.56 to 1.58 over the last 30 days, an increase of 1.28%. This increase came during a time when the stock price changed by -1.42% (from 38.06 to 37.52 over the last 30 days).
8. Research In Motion Limited (RIMM): Designs, manufactures, and markets wireless solutions for the worldwide mobile communications market. Takeover/LBO rumor sourced from Wall St. Daily. The EPS estimate for the company's current year increased from 4.13 to 4.16 over the last 30 days, an increase of 0.73%. This increase came during a time when the stock price changed by -5.17% (from 14.88 to 14.11 over the last 30 days).
*EPS data sourced from Yahoo! Finance, all other data sourced from Finviz.
