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4 Value Stocks to Beat Estimates This Earnings Season

Value stocks are those that the market is undervaluing for some reason. So effectively, they are stocks that are trading at a discount to their intrinsic value. Investors buying this kind of stock are looking to hold on until their true value is realized.

Therefore, this approach to investing entails a somewhat longer holding period and lower risk. Value stocks sometimes, though not always offer a dividend, depending on how mature the company is.

During earnings season of course, the biggest driver of stocks is estimate revisions. When a company beats the estimated earnings/revenue and provides encouraging guidance, estimates inevitably go up. Then the shares become undervalued.

But investors also pile into these stocks, which sends the shares up until a fair valuation is achieved. At times, this leads to disequilibrium as prices appreciate more than the true value and have to be bid down again. But in general, this creates opportunity for investment in stocks.

But timing is all important in the stock market. What we really need is to get into the stocks before the earnings beat and subsequent estimate revisions because that way, we can make the biggest gains.

For this purpose, we have a proprietary tool at Zacks, called the Earnings ESP (Expected Surprise Prediction), which is essentially the difference between the Zacks Consensus and the most recent estimate, expressed as a percentage. It’s based on the premise that the most recent estimate considers the most recent events impacting the company’s earnings, which also makes it the most accurate.

Historically, it has been seen that a company with a Zacks Rank of #1, #2 or #3 and positive ESP generally posts a positive surprise.

So here, I’ve picked a few buy-ranked stocks that have a Value Score A or B, a positive estimate revision trend and a positive ESP. They also have a consistent history of beating earnings estimates.

LouisianaPacific Corp. LPX

Louisiana-Pacific is a leading manufacturer of sustainable, quality engineered wood building materials, structural framing products as well as exterior siding for use in residential, industrial and light commercial construction. Currently, the company operates 20 modern, strategically located facilities in the United States and Canada, two facilities in Chile and one facility in Brazil. It also operates facilities through a joint venture. The company’s products are used primarily in new home construction, repair as well as remodeling and outdoor structures.

Zacks Rank #1 (Strong Buy)

Value Score B

Industry: Building Products - Wood (top 5%)

2021 EPS estimate up 96.4% in the last 90 days, up 48.3% in the last 30 days

2021 EPS growth estimate 103.7%

Earnings ESP for the quarter to be reported is 3.80%

Has topped the Zacks Consensus Estimate by an average 41.5% in the last 4 quarters

Vishay Intertechnology, Inc. VSH

Malvern, Pennsylvania-based Vishay is a global manufacturer and supplier of semiconductors and passive components.

Zacks Rank #2 (Buy)

Value Score A

Industry: Semiconductor – Discretes (top 24%)

2021 EPS estimate up 43.6% in the last 90 days, up 10.4% in the last 30 days

2021 EPS growth estimate 107.6%

Earnings ESP for the quarter to be reported is 5.22%

Has topped the Zacks Consensus Estimate by an average 66.8% in the last 4 quarters

GasLog Partners LP GLOP

GasLog Partners LP owns, operates and acquires LNG carriers with multi-year charters. The company charges customers for the transportation of their LNG using its LNG carriers. GasLog Partners LP is based in Monaco.

Zacks Rank #1

Value Score A

Industry: Transportation - Shipping (top 32%)

2021 EPS estimate up 38.0% in the last 90 days, up 22.5% in the last 30 days

2021 EPS growth estimate -24.0%

Earnings ESP for the quarter to be reported is 7.25%

Has topped the Zacks Consensus Estimate by an average 20.1% in the last 4 quarters

Franchise Group, Inc. FRG

Franchise Group is the indirect parent company of Liberty Tax Service and Buddy's Home Furnishings. It is focused on the evaluation and acquisition of franchise-oriented or complementary businesses.

The company also owns Buddy's Home Furnishings, a specialty retailer engaged in the business of leasing and selling consumer electronics, residential furniture, appliances and household accessories. The company is based in Virginia Beach, United States.

Zacks Rank #1

Value Score B

Industry: Consumer Products - Staples (bottom 17%)

Price Movement Over Past Month

 

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LouisianaPacific Corporation (LPX): Free Stock Analysis Report
 
Franchise Group, Inc. (FRG): Free Stock Analysis Report
 
Vishay Intertechnology, Inc. (VSH): Free Stock Analysis Report
 
GasLog Partners LP (GLOP): Free Stock Analysis Report
 
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