According to a recent report by Zack’s Investment Research, 484 members of the S&P 500 have reported Q4 earnings thus far. Total earnings from these companies have grown 7.4% in Q4 compared to 3.6% in Q3 while revenues have increased 4.9% in Q4 vs 2.1% in Q3.
Although 16 companies have yet to report, it is now safe to assume that Q4 earnings growth for S&P 500 listed members will reach its highest level in nearly two years. Furthermore, the absolute earnings total for these companies is expected to reach a record high: ~$289 billion. This compares to $285 billion in Q3 and a much lower $269 billion in Q4 ’15.
With stocks at record highs and now earnings expected to follow suit, value investors may be having difficulty finding stocks trading at a reasonable price. Here are five that are also expected to report earnings this week.
Ciena is expected to report on Wednesday and seven separate cashflow analyses imply that the stock’s over 25% undervalued.
Signet Jewelers is expected to report earnings on Thursday and the stock is currently trading near its 52 week low. Finbox.io fair value data implies that shares are over 20% undervalued while Wall Street’s consensus price target of $104 per share implies over 50% upside!
AdvancePierre Foods is also expected to report earnings on Thursday while eight valuation models conclude that shares are approximately 17% undervalued.
Six valuation analyses imply that Urban Outfitters is approximately 18% undervalued prior to reporting earnings (expected Tuesday). This figure is right in line with Wall Street.
United Natural Foods appears to be trading at an 18% discount to its intrinsic value before earnings (expected Wednesday).
These stocks all have strong fundamentals and could easily trade 15% higher based on their underlying earnings. Value investors may want to take a closer look at these names prior to earnings this week.
by Warren E. Buffett, edited by Lawrence A. Cunningham
Buffett, the Bard of Omaha, is a genuine American folk hero, if folk heroes are allowed to build fortunes worth upward of $15 billion. He’s great at homespun metaphor, but behind those catchy phrases is a reservoir of financial acumen that’s generally considered the best of his generation.
“There are a few investment managers, of course, who are very good – though in the short run, it’s difficult to determine whether a great record is due to luck or talent. Most advisors, however, are far better at generating high fees than they are at generating high returns. In truth, their core competence is salesmanship. Rather than listen to their siren songs, investors – large and small – should instead read Jack Bogle’s The Little Book of Common Sense Investing.” – Warren Buffett.