5 Value Stocks With Exciting EV-to-EBITDA Ratios to Snap Up

Core Viewpoint - The article discusses the advantages of using the EV-to-EBITDA ratio over the traditional P/E ratio for evaluating stock valuations, highlighting its ability to provide a more comprehensive view of a company's financial health and potential earnings [1][2]. Group 1: EV-to-EBITDA vs. P/E - EV-to-EBITDA is defined as the enterprise value divided by earnings before interest, taxes, depreciation, and amortization, offering a clearer picture of profitability by excluding non-cash expenses [2]. - The EV-to-EBITDA ratio is considered more attractive when lower, indicating potential undervaluation of a stock [2][3]. - Unlike P/E, EV-to-EBITDA accounts for a company's debt, making it a preferred metric for valuing acquisition targets and assessing companies with varying debt levels [3]. Group 2: Limitations of P/E and EV-to-EBITDA - P/E cannot be used for loss-making firms, while EV-to-EBITDA can evaluate EBITDA-positive companies regardless of profitability [3]. - EV-to-EBITDA is not universally applicable across different industries due to varying capital expenditure requirements, suggesting that it should be used in conjunction with other ratios like P/B and P/S for a more rounded analysis [4]. Group 3: Screening Criteria for Value Stocks - Screening for value stocks includes parameters such as EV-to-EBITDA less than the industry median, P/E less than the industry median, and P/B less than the industry median, indicating undervaluation [5][6]. - Additional criteria include a P/S ratio lower than the industry median, estimated one-year EPS growth greater than or equal to the industry median, and a minimum current price of $5 [6][7]. Group 4: Stock Recommendations - KB Home (KBH) is highlighted as a strong buy with a Zacks Rank of 1 and a Value Score of A, with a 5.5% upward revision in fiscal 2024 earnings estimates [7]. - American Vanguard Corporation (AVD) is noted for an expected year-over-year earnings growth rate of 196.2% for 2024, also holding a Zacks Rank of 2 and a Value Score of A [8]. - Navios Maritime Partners (NMM) and Signet Jewelers (SIG) are recognized for their respective earnings growth rates of 15.9% and 2.2% for 2024 and fiscal 2025, both with a Zacks Rank of 2 [8][9]. - Portland General Electric (POR) is mentioned with an expected earnings growth rate of 29% for 2024 and a Value Score of B, also holding a Zacks Rank of 2 [9].