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3 Stocks Trading Below the Earnings Power Value

GuruFocus.com
·4 min read

- By Alberto Abaterusso

When verifying whether a stock is fairly priced, undervalued or overvalued, some investors use the Earnings Power Value (EPV) metric as an estimate of intrinsic value.

The EPV was designed by Bruce Greenwald, a professor at Columbia University, with the target to circumvent several problems regarding the assumptions that discounted cash flow valuation models usually involve. The EPV is calculated by dividing the adjusted earnings by the weighted average cost of capital.


The following trio of stocks seems to be fairly valued, as their share prices are trading close to or below their respective EPVs.

ACCO Brands Corp

The first stock that qualifies is ACCO Brands Corp (NYSE:ACCO), a Lake Zurich, Illinois-based producer and marketer of business equipment and supplies.

ACCO Brands Corp's EPV is $55.10 per share (as of June 29), which is higher compared to the share price of $6.54 at close on Friday for a margin of safety of 88%.

As a result of a 31.4% downturn that the share price suffered over the last 12 months of trading, the market capitalization is $617.78 million. The 52-week range is $3.51 to $11.38.

3 Stocks Trading Below the Earnings Power Value
3 Stocks Trading Below the Earnings Power Value

GuruFocus has assigned a score of 4 out of 10 to the company's financial strength and 7 out of 10 to its profitability.

Wall Street sell-side analysts issued an overweight recommendation rating for the stock and have established an average target price of $10.60 per share.

VANGUARD GROUP INC leads the group of the company's top fund holders, owning 8.75% of shares outstanding.

CNB Financial Corp

The second stock that has the criteria is CNB Financial Corp (NASDAQ:CCNE), a Clearfield, Pennsylvania-based holder of CNB Bank, which is a regional bank that serves individual and institutional customers, as well as business and public organizations.

CNB Financial Corp's EPV of $42.57 per share (as of June 29) is higher compared to Friday's closing share price of $16.53, for a margin of safety of 61.2%.

Following a 38.42% decline suffered by the share price over the last 12 months of trading, the market capitalization is now $279.34 million and the 52-week range is $13.25 to $33.78.

3 Stocks Trading Below the Earnings Power Value
3 Stocks Trading Below the Earnings Power Value

GuruFocus has assigned a score of 3 out of 10 to the company's financial strength rating and of 4 out of 10 to its profitability rating.

Wall Street sell-side analysts issued an overweight recommendation rating for the stock and have established an average target price of $22.50 per share.

BlackRock Inc. and VANGUARD GROUP INC lead the group of top fund holders of the company, holding 5.15% and 4.50% of shares outstanding, respectively.

Tompkins Financial Corp

The third stock that makes the cut is Tompkins Financial Corp (TMP), an Ithaca, New York-based operator of a regional financial services company, providing its clients with various products and services.

Tompkins Financial Corp's EPV is $89.71 per share (as of June 29), which is above the share price of $66.36 at close on Friday, determining a margin of safety of 26%.

After a 17.6% stock price decline through the past year, the market capitalization now trades at $989.92 million and the 52-week range is $53.32 to $93.66.

3 Stocks Trading Below the Earnings Power Value
3 Stocks Trading Below the Earnings Power Value

GuruFocus has assigned a score of 3 out of 10 to the financial strength rating and a score of 5 out of 10 to the profitability of the company.

Wall Street recommends a hold rating for the stock with an average target price of $72 per share.

BlackRock Inc. and VANGUARD GROUP INC lead the group of top fund holders of the company, owning 13.02% and 9.67% of shares outstanding, respectively.

Disclosure: I have no position in any security mentioned.

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This article first appeared on GuruFocus.