Core Insights - The price-to-earnings (P/E) ratio is a popular metric among investors for identifying undervalued stocks, but it has limitations, including its inability to value loss-making firms and susceptibility to accounting manipulation [1][5] - The EV-to-EBITDA ratio is considered a more comprehensive alternative, providing a clearer picture of a company's valuation by accounting for debt and offering insights into profitability [2][3][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), making it a useful tool for assessing companies with varying levels of debt [3][4] - A lower EV-to-EBITDA ratio indicates a potentially undervalued stock, making it attractive for acquisition targets [4][5] - The P/E ratio does not account for debt, which can lead to misleading valuations, especially for companies with significant leverage [4][5] Screening Criteria for Value Stocks - Parameters for screening value stocks include an EV-to-EBITDA ratio lower than the industry median, a P/E ratio below the industry median, and a price-to-book (P/B) ratio less than the industry average [8][10] - Additional criteria include a price-to-sales (P/S) ratio lower than the industry median, estimated one-year EPS growth greater than or equal to the industry median, and a minimum average trading volume of 50,000 shares [10][11] Selected Stocks - Plains GP Holdings, L.P. (PAGP) has a Zacks Rank of 1 and a Value Score of A, with an expected year-over-year earnings growth rate of 27% for 2026 [12][13] - DNOW Inc. (DNOW) also holds a Zacks Rank of 1 and a Value Score of A, with an expected earnings growth rate of 18.5% for 2026 [13][14] - Gibraltar Industries, Inc. (ROCK) has a Zacks Rank of 2 and a Value Score of A, with an expected earnings growth rate of 11% for 2026 [14] - Miller Industries, Inc. (MLR) is another Zacks Rank 2 stock with a Value Score of A, showing a remarkable expected earnings growth rate of 139.5% for 2026 [15] - Sally Beauty Holdings, Inc. (SBH) has a Zacks Rank of 2 and a Value Score of A, with an expected earnings growth rate of 8.4% for fiscal 2026 [15][16]

Core Insights - Investors often focus on the price-to-earnings (P/E) ratio for stock valuation, but this metric has limitations and may not always reflect a company's true value [1][6] - The EV-to-EBITDA ratio is considered a more comprehensive valuation metric, as it accounts for a company's total value and provides a clearer picture of profitability [2][4] Valuation Metrics - The EV-to-EBITDA ratio is calculated by dividing a company's enterprise value (EV) by its earnings before interest, taxes, depreciation, and amortization (EBITDA), offering a more complete valuation approach [4] - A lower EV-to-EBITDA ratio typically indicates that a stock may be undervalued, making it an attractive option for investors [5] Stock Recommendations - Stocks such as El Pollo Loco Holdings, Inc. (LOCO), OppFi Inc. (OPFI), Edison International (EIX), ScanSource, Inc. (SCSC), and Zions Bancorporation (ZION) have been identified as having attractive EV-to-EBITDA ratios [3][11] - Each of these stocks meets specific screening criteria, including low EV-to-EBITDA ratios, P/E ratios below industry medians, and strong growth potential [8][10] Growth Projections - El Pollo Loco is expected to have a year-over-year earnings growth rate of 7.9% for 2025, with a recent upward revision of 4.4% in earnings estimates [12] - OppFi is projected to have a significant earnings growth rate of 65.3% for 2025, with a 10.6% upward revision in earnings estimates [13] - Edison International anticipates a 23.7% earnings growth rate for 2025, with a slight upward revision of 0.5% in estimates [14] - ScanSource expects a year-over-year earnings growth rate of 15.7% for fiscal 2026, with a 4% upward revision in estimates [15] - Zions Bancorporation has a projected earnings growth rate of 19% for 2025, with a 2.1% upward revision in estimates [16]

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]