Yahoo Finance Are These Top-Ranked Stocks Bargains After Earnings?
Earnings season often gives a clearer picture of rather stocks are undervalued in combination with the guidance companies can offer in their outlook.
Here are two top-ranked stocks that appear to be trading at a discount following their strong fourth-quarter reports.
Corebridge Financial (CRBG)
Sporting a Zacks Rank #2 (Buy), Corebridge Financials stock makes the argument for trading at a perceived bargain following its Q4 report last Friday.
Corebridge impressively beat bottom-line expectations by 24% with EPS at $0.88 and beat top-line estimates by 1% with sales at $5.34 billion. The strong quarterly results are very intriguing as Corebridge recently went public last September.
As a provider of retirement solutions and insurance products in the U.S., Corebridge’s earnings estimate revisions have continued to trend higher over the last 60 days. More importantly, fiscal 2023 earnings estimates have already gone up following its Q4 results.
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Fiscal 2023 earnings are now expected to climb 31% to $3.77 per share compared to EPS of $2.87 in 2022. Plus, fiscal 2024 earnings are projected to pop another 23% to $4.66 per share, based on Zacks estimates.
On the top line, sales are forecasted to be up 6% in FY23 and rise another 7% in FY24 to $20.35 billion. More impressive, with 2019 sales at $13.21 billion fiscal 2024 would represent 54% growth from pre-pandemic levels.
For a stock trading at just $20 a share at the moment, CRBG’s bottom-line growth is very intriguing and points to the stock being undervalued. Corebridge stock trades at just 5.5X forward earnings which is nicely below its historical high of 8.8X since going public and 25% beneath the median of 7.3X.
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Furthermore, CRBG trades nicely below the industry average of 10.4X and the S&P 500’s 18.6X. Corebridge stock sports an “A” Style Scores grade for Value and an overall “A” VGM grade for the combination of Value, Growth, and Momentum.
Corebridge stock is now down -2% since its IPO last year to slightly underperform the S&P 500’s +2% and the Insurance Multi-Line Markets’ +8% during this period. Year to date, shares of CRBG are up +1% to roughly match its Zacks Subindustry but trail the benchmark’s +6%. However, there could certainly be more upside in 2023 and beyond following Corebridge’s stellar Q4 results and the company’s bottom line expanding at an impressive pace.
Vale S.A. (VALE)
Also sporting a Zacks Rank #2 (Buy) Vale South America stock still looks attractive following its strong Q4 results last Thursday. The mining company impressively beat bottom-line expectations by 30% with Q4 EPS of $0.82, despite this being down -42% year over year. Fourth quarter sales beat expectations by 4% at $11.94 billion, although this was down -9% YoY.
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Vale is one of the largest mining companies in the world, producing iron ore, iron ore pellets, and nickel along with manganese ore, ferroalloys, metallurgical and thermal coal, copper, platinum group metals (PGMs), gold, silver, and cobalt.
Furthermore, the strong Q4 results make it quite plausible that earnings estimate revisions will continue to rise as Vale should continue to benefit from higher commodity prices in correlation with high inflation.
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According to Zacks estimates, Vale’s fiscal 2023 earnings are projected to decline -21% at $2.83 per share following another impressive year. With that being said, earnings estimates have gone up 13% throughout the quarter. Fiscal 2024 earnings are expected to drop another -3% but estimates have gone up 6% over the last 90 days.
Sales are forecasted to be down -7% in FY23 and fall another -5% in FY24 to $38.31 billion. Still, fiscal 2024 sales would be 2% above pre-pandemic levels with 2019 sales at $37.57 billion.
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Plus, Vale stock remains attractive from a valuation standpoint sporting an “A” Style Scores grade for Value. Shares of VALE trade at $17 per share and 6X forward earnings which is on par with the industry average and well below the S&P 500’s 18.6X.
Even better, Vale stock trades 93% below its decade-long high of 87.6X and at a slight discount to the median of 7.4X. More impressive, Vale stock is now up +49% over the last three years to largely outperform the S&P 500’s +22% and roughly match the Mining-Iron Markets strong performance.
Bottom Line
Both Corebride (CRBG) and Vale S.A. (VALE) stocks do appear to be bargains at their current levels based on their valuations from a price-to-earnings perspective with earnings estimate revisions also on the rise. This confirms that their affordable stock prices should be intriguing to investors and there could very well be more upside for CRBG and VALE stock.
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