Core Insights - Investors often focus on the price-to-earnings (P/E) ratio for stock valuation, but it has limitations [1] - The EV-to-EBITDA ratio is considered a more comprehensive valuation metric, providing a clearer picture of a company's true value and earnings potential [2][4] Valuation Metrics - EV-to-EBITDA is calculated by dividing a company's enterprise value (EV) by its earnings before interest, taxes, depreciation, and amortization (EBITDA) [4] - EV accounts for market capitalization, debt, and preferred stock, minus cash and cash equivalents, offering a complete view of a company's value [4] - EBITDA provides insight into profitability by excluding non-cash expenses, making it a useful proxy for cash flows [4] Investment Opportunities - Stocks with low EV-to-EBITDA ratios are often seen as undervalued and attractive for acquisition [5] - Companies like Astrana Health, KT Corporation, Upbound Group, Noah Holdings, and DXP Enterprises have impressive EV-to-EBITDA ratios, indicating potential investment opportunities [3][9] Screening Criteria for Bargain Stocks - Parameters for screening include EV-to-EBITDA less than the industry median, P/E less than the industry median, and P/B less than the industry median [8][10] - Additional criteria include a minimum average trading volume, current price above $5, and a favorable Zacks Rank [11] Company Profiles - Astrana Health is a physician-centric healthcare company with a Zacks Rank of 1 and an expected earnings growth rate of 76.7% for 2025 [12][13] - KT Corporation, the largest telecommunications operator in South Korea, has a Zacks Rank of 2 and an expected earnings growth rate of 280% for 2025 [13] - Upbound Group, a lease-to-own provider, has a Zacks Rank of 2 with a projected earnings growth rate of 9.1% for 2025 [14] - Noah Holdings, a wealth management service provider in China, has a Zacks Rank of 2 and an expected earnings growth rate of 28% for 2025 [15] - DXP Enterprises, providing innovative solutions and services, has a Zacks Rank of 2 and an expected earnings growth rate of 17.5% for 2025 [16]
Tap These 5 Bargain Stocks With Alluring EV-to-EBITDA Ratio