4 Stocks Reporting This Week Undervalued by The Graham Number

We're at the tail end of earnings season but that doesn't mean we're out of opportunity. There are plenty of potentially undervalued names itching to surprise analysts with higher than expected earnings. To help you find names likely to report to the upside we put together a list of potentially undervalued stocks reporting earnings this week. [More ideas: 3 Tech Stocks Reporting Earnings to Watch This Week]

Building The List

To create the list below we created a universe of stocks with market caps above $50 million and share price above $1 (for sustainability) that are reporting earnings later this week. May 21-24.  

We screened that universe for those that appear undervalued relative to the Graham Number. The Graham Number is a measure of maximum fair value created by the "godfather of value investing" Benjamin Graham.

It is based on a stock's EPS and book value per share (BVPS).

Graham Number = SQRT(22.5 x TTM EPS x MRQ BVPS)

The equation assumes that P/E should not be higher than 15 and P/BV should not be higher than 1.5. Stocks trading well below their Graham Number may be undervalued.

Business Section: Investing Ideas

Do you think these names are truly undervalued and ready to surprise? Use this list as a starting point for your own analysis.

Interactive chart: Compare average analyst ratings for the stocks mentioned below. Press play to see how ratings changed over the past two years. Click through for more free tools.

 

Your browser does not support iframes.

 

1. International Bancshares Corporation (IBOC, Earnings, Analysts, Financials): Provides commercial and retail banking services in south, central, and southeast Texas; and Oklahoma. Market cap at $1.45B, most recent closing price at $21.57.

Reporting on 05/22/13.

Diluted TTM earnings per share at 1.39, and a MRQ book value per share value at 21.36, implies a Graham Number fair value = sqrt(22.5*1.39*21.36) = $25.85. Based on the stock's price at $21.57, this implies a potential upside of 19.83% from current levels.

 

2. Spartan Stores Inc. (SPTN, Earnings, Analysts, Financials): Operates as a grocery distributor and grocery retailer principally in Michigan and Indiana. Market cap at $373.45M, most recent closing price at $17.17.

Reporting on 05/22/13.

Diluted TTM earnings per share at 1.37, and a MRQ book value per share value at 15.14, implies a Graham Number fair value = sqrt(22.5*1.37*15.14) = $21.60. Based on the stock's price at $17.17, this implies a potential upside of 25.82% from current levels.

 

3. Apollo Investment Corporation (AINV, Earnings, Analysts, Financials): Operates as a closed-end management investment company. Market cap at $1.77B, most recent closing price at $8.73.

Reporting on 05/23/13.

Diluted TTM earnings per share at 0.77, and a MRQ book value per share value at 8.14, implies a Graham Number fair value = sqrt(22.5*0.77*8.14) = $11.88. Based on the stock's price at $8.73, this implies a potential upside of 36.03% from current levels.

 

4. Perry Ellis International Inc. (PERY, Earnings, Analysts, Financials): Engages in designing, sourcing, marketing, and licensing apparel products for men and women in the United States and internationally. Market cap at $297.75M, most recent closing price at $19.41.

Reporting on 05/23/13.

Diluted TTM earnings per share at 0.97, and a MRQ book value per share value at 24.75, implies a Graham Number fair value = sqrt(22.5*0.97*24.75) = $23.24. Based on the stock's price at $19.41, this implies a potential upside of 19.74% from current levels.

 

 

(List compiled by Rebecca Lipman)

 

Use Kapitall's Tools: Looking for ways to analyze this list?Use this article snapshot as a launch pad (click here for help): Simply click on the links, and use Kapitall's tab navigation to browse through the data...

 

Analyze These Ideas: Getting Started

Read descriptions for all companies mentioned Access a performance overview for all stocks in the list Compare analyst ratings for the companies mentioned Compare analyst ratings to annual returns for stocks mentioned Real-Time Opinion: Scan the latest tweets about these companies (feed will open in a new window)

Dig Deeper: Access Company Snapshots, Charts, Filings

International Bancshares Corporation (IBOC, Chart, Download SEC Filings) Spartan Stores Inc. (SPTN, Chart, Download SEC Filings) Apollo Investment Corporation (AINV, Chart, Download SEC Filings) Perry Ellis International Inc. (PERY, Chart, Download SEC Filings)

New to Kapitall?1. New to the site? Click here to register for a free account, and gain access to more tools and data2. Looking for more investing ideas like this? Click here to sign up for your free copy of Kapitall Weekly3. Follow us on SeekingAlpha, Motley Fool, Nasdaq and Twitter

 

ABOUT KAPITALL WIREKapitall Wire, which is not a broker/dealer, offers free cutting edge investing ideas, lively commentary and timely analysis of companies enhanced by interactive tools. And the Investing 101 section breaks complex concepts down to their basics, offering education to novices that doubles as a refresher course for more seasoned investors.Kapitall Wire is a division of Kapitall Inc. Securities products and services are offered by Kapitall Generation, LLC, member FINRA/SIPC . Kapitall Generation, LLC is a wholly owned subsidiary of Kapitall, Inc.

 

Articles