08/08/2020

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5 Undervalued Companies With High Piotroski F-Scores

As buyers go on grappling with rising coronavirus fears, five shares that have a superior...

As buyers go on grappling with rising coronavirus fears, five shares that have a superior Piotroski F-Score and are trading underneath intrinsic price dependent on tangible e-book, Graham range and median value-income price are Danaos Corp. (NYSE:DAC), Empresa Distribuidora y Comercializadora Norte SA (NYSE:EDN), StealthGas Inc. (NASDAQ:GASS), Sigmatron Intercontinental Inc. (NASDAQ:SGMA) and TAT Systems Ltd. (NASDAQ:TATT).

Dow slides as world coronavirus circumstances top rated twelve million

On Thursday, the Dow Jones Industrial Average closed at 25,706.fifty seven, down 360.seventy one factors from Wednesday’s close of 26,067.28 and 121.88 factors from final Thursday’s close 25,828.45. The thirty-inventory index tumbled as much as five hundred factors on the heels of coronavirus circumstances topping twelve million all around the globe, such as 3 million circumstances in the U.S., in accordance to Johns Hopkins College data.

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According to CNBC, AssetMark Chief Economist Jason Thomas warned that it is evidently starting to be challenging to reopen the economy “without producing a renewed surge” in coronavirus circumstances. Twelve states in the U.S. strike a history 7-day regular for every day new Covid-19 circumstances on Wednesday in accordance to a CNBC evaluation of Johns Hopkins facts.

Piotroski F-Score steps the strength of organization functions

Accounting professor Joseph Piotroski made in 2000 a 9-level scoring procedure that gauges the strength of a company’s organization functions working with facts from a company’s revenue assertion and harmony sheet. The Piotroski F-Score considers ratios like return on assets, credit card debt-to-asset ratio, present-day ratio, web issuance of inventory, gross margin and asset turnover.

Piotroski observed that a design portfolio consisting of shares with reduced value-e-book ratios and an F-Score of at least 8 or 9 outperformed the Standard & Poor’s five hundred index benchmark by close to 13.4% for the duration of the 20-year period of time from 1976 to 1996. GuruFocus defines a superior Piotroski F-Score as a rating of at least seven.

The accounting professor also observed that shorting shares with F-Scores underneath 1, in addition to purchasing shares with F-Scores above 8, yielded an regular once-a-year return of 23% for the duration of the backtest period of time. GuruFocus problems a warning sign if a firm has a Piotroski F-Score of 3 or fewer.

Short discussion of a couple GuruFocus valuation strategies and Piotroski F-Score Screener

GuruFocus computes numerous valuation metrics, ranging from traditional metrics like discounted free cash circulation to other metrics like tangible e-book, Graham range and median value-income price.

Tangible e-book price strips away intangible assets from whole stockholder’s fairness. GuruFocus computes the Graham range as the square root of 22.5 periods the solution of a company’s tangible e-book price for each share and earnings for each share. The Graham range signifies the greatest value a defensive trader must fork out for a inventory: According to Benjamin Graham’s idea, the present-day value must not exceed 15 periods earnings and 1.5 periods e-book.

Last but not least, the median value-income price signifies the stock’s fair price assuming that the valuation reverses to the ten-year median value-income ratio.

The Piotroski F-Score Screener lists the shares with an F-Score of at least seven and a value-e-book ratio that outperforms at least 80% of field rivals all around the globe. The Screener identified five businesses that are trading underneath 80% of intrinsic price dependent on tangible e-book, Graham range and median value-income price.

Danaos

Danaos gives seaborne transportation expert services via its network of containerships. GuruFocus ranks the Greek shipping and delivery company’s valuation ten out of ten on the back of value valuations being around ten-year lows and are outperforming in excess of ninety eight% of world rivals. Other positive investing symptoms incorporate earnings margins outperforming in excess of ninety four% of world transportation businesses.

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Empresa Distribuidora y Comercializadora Norte

Empresa Distribuidora y Comercializadora Norte distributes electric power generally to the northern portion of Buenos Aires, Argentina. GuruFocus ranks the company’s valuation ten out of ten on the back of value valuations being around ten-year lows and outperforming in excess of 99% of world rivals.

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The company’s profitability ranks 5 out of ten: Functioning margins are underperforming sixty% of world rivals inspite of returns and a few-year income progress charges outperforming in excess of 88% of world rivals.

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StealthGas

StealthGas owns liquefied petroleum gasoline-pressurized carriers and gives global seaborne transportation expert services throughout the world. GuruFocus ranks the Greek shipping and delivery company’s profitability six out of ten: Despite the fact that the functioning margin outperforms seventy eight.sixty five% of world rivals, returns are underperforming in excess of a few-quarters of world transportation businesses.

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StealthGas’ valuation ranks six out of ten: Despite the fact that the company’s value-e-book ratio outperforms in excess of 96% of world rivals, its price-earnings ratio underperforms ninety two% of world friends.

Sigmatron

Sigmatron gives printed circuit board assemblies and digital products. GuruFocus ranks the Grove Village, Illinois-dependent company’s valuation ten out of ten on the back of value valuations being around ten-year lows and outperforming in excess of 89% of world rivals.

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TAT Systems

TAT Systems gives remedies and expert services to the aerospace and defense industries. GuruFocus ranks the Israeli-dependent industrial company’s financial strength seven out of ten: Credit card debt ratios are outperforming in excess of seventy one% of world rivals inspite of a reduced interest coverage ratio of 2.22.

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Disclosure: No positions.

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About the author:

James Li

I am an editorial researcher at GuruFocus. I have a Master’s in Finance from SMU, and I enjoy producing stories on financial developments and trader portfolios. Observe me on Twitter at @JamesLiGuru!

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