8 Takeover/LBO Targets Undervalued By EPS Trends

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Includes: AKAM, ANTM, BBRY, CKH, EXXIQ, JACK, MRVL, POWI
by: Kapitall

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. (NASDAQ: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. (NYSE: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. (NASDAQ: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. (NASDAQ: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. (NASDAQ: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.

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