5 Undervalued Large-Caps With Impressive Profitability

Includes: AZO, CHK, DFS, ESV, LVS
by: Kapitall

Do you prefer sticking to well known large-cap stocks? If so, we ran a screen to find some interesting large-caps to put on your radar.

We began by screening the large-cap sector, stocks with market caps above $10 billion, for those that appear undervalued relative to earnings growth, with PEG below 1.

We then screened for those with strong profitability compared to industry peers, with higher gross, operating, and pretax margins than their industry averages by at least 5% on each margin. This indicates that these companies are taking a greater percentage of their revenues as profits, and they also have stronger control over their cost structures.

For an interactive version of this chart, click on the image below. Analyst ratings sourced from Zacks Investment Research.

Tool provided by Kapitall (kapitall.com).

Do you think these stocks are poised to move higher? Use this list as a starting point for your own analysis.

List sorted by difference between pretax margin and industry average.

1. Discover Financial Services (DFS): Operates as a credit card issuer and electronic payment services company primarily in the United States. Market cap at $17.84B, most recent closing price at $34.65. PEG at 0.87. TTM gross margin at 49.8% vs. industry average at 34.53%. TTM operating margin at 48.75% vs. industry average at 31.7%. TTM pretax margin at 43% vs. industry average at 25.79%.

2. Ensco plc (ESV): Provides offshore contract drilling services to the oil and gas industry. Market cap at $11.07B, most recent closing price at $47.84. PEG at 0.77. TTM gross margin at 48.95% vs. industry average at 34.23%. TTM operating margin at 31.32% vs. industry average at 18.6%. TTM pretax margin at 27.27% vs. industry average at 13.77%.

3. Chesapeake Energy Corporation (CHK): Engages in the acquisition, development, exploration, and production of natural gas and oil properties in the United States. Market cap at $12.64B, most recent closing price at $19.08. PEG at 0.97. TTM gross margin at 43.92% vs. industry average at 30.55%. TTM operating margin at 22.69% vs. industry average at 12.11%. TTM pretax margin at 25.25% vs. industry average at 15.62%.

4. AutoZone Inc. (AZO): Operates as a specialty retailer and distributor of automotive replacement parts and accessories. Market cap at $13.81B, most recent closing price at $368.93. PEG at 0.99. TTM gross margin at 53.76% vs. industry average at 37.63%. TTM operating margin at 18.78% vs. industry average at 10.48%. TTM pretax margin at 16.76% vs. industry average at 9.78%.

5. Las Vegas Sands Corp. (LVS): Develops, and operates various integrated resort properties primarily in the United States, Macau, and Singapore. Market cap at $33.73B, most recent closing price at $41.0. PEG at 0.74. TTM gross margin at 48.04% vs. industry average at 36.9%. TTM operating margin at 26.48% vs. industry average at 19.39%. TTM pretax margin at 23.13% vs. industry average at 17.29%.

*Profitability data sourced 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.

About this article:

Author payment: $35 + $0.01/page view. Authors of PRO articles receive a minimum guaranteed payment of $150-500. Become a contributor »
Problem with this article? Please tell us. Disagree with this article? .