As part of a new series here at The Acquirer’s Multiple, we’re going to be providing a comprehensive analysis of this week’s U.S Large-Cap Stock Screener including an overview, industry/sector analysis and performance, and our key observations.
Market Overview: This week’s large-cap screener includes a diverse mix of industries with strong representation from the energy, finance, telecommunications, healthcare, and industrial sectors. The overall market performance indicates a mix of positive and negative price movements, with some industries exhibiting strong fundamentals and growth potential, while others show signs of volatility and financial risk.
1. Top Performers (Lowest Acquirer’s Multiple):
– ArcelorMittal SA (MT) – Metal Products: With an Acquirer’s Multiple of 1.00, ArcelorMittal is the most undervalued company in this screen. It has a strong Return on Assets (ROA) of 34% and a high Expected Return (E(r)) of 41.72%, making it a standout in the metal products industry.
– Stellantis NV (STLA) – Consumer Vehicles and Parts: Stellantis has an Acquirer’s Multiple of 1.70, indicating it is also undervalued. It has a high Dividend Yield (12.87%) and a solid FCF Yield (7.03%), making it attractive for both value and income investors.
– Synchrony Financial (SYF) – Specialty Finance: With an Acquirer’s Multiple of 2.10, Synchrony Financial is another strong performer. It has an impressive FCF Yield (42.46%), suggesting strong cash generation relative to its market value.
2. Integrated Oil and Gas Exploration and Production:
– Equinor ASA (EQNR) and Petroleo Brasileiro (PBR) have low Acquirer’s Multiple values (2.30 and 2.80, respectively), making them attractive in this sector. Both companies have high FCF Yields (12.82% and 48.11%) and strong Expected Returns (46.48% and 51.36%), indicating significant upside potential.
– Ecopetrol SA (EC) has a higher Acquirer’s Multiple (6.50) but offers a high Dividend Yield (20.05%), which may appeal to income-focused investors despite its higher debt levels (Debt-to-Equity of 115.21%).
3. Metal Ore Mining:
– Vale SA (VALE) and Rio Tinto plc (RIO) have Acquirer’s Multiple values of 4.80 and 5.90, respectively. Both companies have solid FCF Yields (6.92% and 8.28%) and Dividend Yields (9.20% and 9.01%), making them attractive for investors seeking exposure to the mining sector.
– Vale’s Expected Return (25.01%) is slightly higher than Rio Tinto’s (23.68%), but both companies are relatively undervalued compared to their operating income.
4. Telecommunications:
– Telkom Indonesia (TLK) and BCE Inc (BCE) have Acquirer’s Multiple values of 7.20 and 7.70, respectively. Both companies offer high Dividend Yields (7.10% and 12.81%), making them attractive for income investors.
– America Movil (AMX) has a higher Acquirer’s Multiple (8.20) but still offers a decent Dividend Yield (3.80%) and a strong FCF Yield (9.84%).
5. Healthcare:
– Molina Healthcare (MOH) and United Therapeutics (UTHR) have Acquirer’s Multiple values of 8.60 and 8.80, respectively. Both companies have moderate FCF Yields (3.41% and 6.31%) and Expected Returns (17.24% and 24.53%), making them relatively undervalued in the healthcare sector.
– Tenet Healthcare (THC) has a higher Acquirer’s Multiple (9.70) but offers a solid FCF Yield (8.91%), which could be attractive for investors looking for cash-generative healthcare companies.
6. Technology and Hardware:
– Western Digital (WDC) and HP Inc (HPQ) have Acquirer’s Multiple values of 7.90 and 10.00, respectively. Both companies have decent FCF Yields (3.51% and 9.94%), but HP Inc offers a higher Dividend Yield (3.38%).
– Nokia (NOK) has an Acquirer’s Multiple of 9.60 and a Dividend Yield of 2.95%, making it a relatively undervalued option in the communications equipment sector.
7. Consumer Goods and Retail:
– Fomento Economico Mexicano (FMX) and Albertsons Companies (ACI) have Acquirer’s Multiple values of 7.80 and 12.40, respectively. FMX offers a higher Dividend Yield (7.45%) and a solid FCF Yield (4.87%), making it more attractive than Albertsons.
– Best Buy (BBY) has an Acquirer’s Multiple of 12.60 and a Dividend Yield of 4.16%, which may appeal to income-focused investors.
8. Energy and Utilities:
– Cenovus Energy (CVE) and Centrais Eletricas Brasileiras (EBR) have Acquirer’s Multiple values of 8.70 and 11.20, respectively. Cenovus offers a higher FCF Yield (11.89%) and Dividend Yield (4.37%), making it a more attractive option in the energy sector.
Key Takeaways:
– ArcelorMittal (MT), Stellantis (STLA), and Synchrony Financial (SYF) are the most undervalued companies based on their low Acquirer’s Multiple values, strong FCF Yields, and high Expected Returns.
– The Integrated Oil and Gas Exploration and Production sector offers several undervalued opportunities, particularly Equinor (EQNR) and Petroleo Brasileiro (PBR), which have strong cash flows and high expected returns.
– Telecommunications and Healthcare sectors also present undervalued companies with attractive dividend yields, such as BCE Inc (BCE) and Molina Healthcare (MOH).
Conclusion:
The Large-Cap screen highlights a number of undervalued companies across various industries, with ArcelorMittal (MT) and Stellantis (STLA) standing out as the most attractive based on their low Acquirer’s Multiple values.
Investors should focus on companies with strong cash flows, manageable debt levels, and attractive dividend yields, while also considering the specific risks associated with each industry.
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