The stock market has faced intense selling pressure of late on concerns over further interest rate hikes to control the high inflation, which may push the economy into recession. A potential slowdown in consumer spending and the continued geopolitical tensions are the other factors leading to bearish investor sentiment.
According to JPMorgan Chase CEO Jamie Dimon, the chances of the Fed curbing inflation without instigating a recession stand at 33%. Amid this situation, it could be wise to invest in undervalued dividend stocks to ensure a steady income stream and increase the chances of gains from their rebound.
Quality mid-cap stocks New Residential Investment Corp. (NRZ), International Game Technology PLC (IGT), and Kohl's Corporation (KSS) are currently trading at discounts to their peers and offer attractive dividend yields. So, it could be wise to bet on these stocks now.
New Residential Investment Corp. (NRZ)
With a market capitalization of $5.05 billion, NRZ operates as a real estate investment trust in the United States. It operates through Origination, Servicing, MSR Related Investments, Residential Securities, Properties and Loans, Consumer Loans, Mortgage Loans, and Corporate segments.
On May 3, 2022, Michael Nierenberg, Chairman, CEO, and President of NRZ, said, "With $1.7 billion of cash and liquidity coupled with the expected market volatility ahead, we should see terrific opportunities to deploy capital effectively and generate great returns for our shareholders in 2022 and beyond."
NRZ’s revenues increased 57.6% sequentially to $1.73 billion for the fiscal first quarter ended March 31, 2022. The company’s net income grew 267.3% sequentially to $689.93 million. Also, its EPS came in at $1.37, up 315.2% sequentially.
The company pays an annual dividend of $1, translating into a 9.22% yield. In terms of forward non-GAAP P/E, NRZ’s 7.36x is 27.2% lower than the industry average of 10.11x.
Analysts expect NRZ’s EPS to come in at $0.37 for the quarter ending June 30, 2022, representing a 19.4% year-over-year increase. Its revenue is expected to increase 37.2% year-over-year to $261.52 million for the current quarter ending September 30, 2022. The stock has surged 11.5% over the past nine months to close yesterday’s trading session at $10.85.
NRZ’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
It has a B grade for Growth, Value, Momentum, and Quality. We have also graded NRZ for Sentiment and Stability. Click here to access all of NRZ’s ratings. NRZ is ranked first out of 31 stocks in the REITs - Mortgage industry.
International Game Technology PLC (IGT)
Headquartered in London, the United Kingdom, IGT operates and provides gaming technology products and services worldwide. It operates through two segments: Global Lottery and Global Gaming. The company designs, sells, operates, and leases a suite of point-of-sale machines and provides online lottery transaction processing systems. It has a market capitalization of $4.13 billion.
On May 10, 2022, Max Chiara, CFO of IGT, said, "We are on pace with our leverage target for the year and expect further improvement with the expected proceeds from the announced asset disposition."
IGT’s revenue increased 4% year-over-year to $1.05 billion for the fiscal first quarter ended March 31, 2022. Its Global Gaming operating income came in at $52 million compared to a loss of $26 million in the prior-year period, while its Digital & Betting adjusted EBITDA increased 63% year-over-year to $17 million.
The company pays an annual dividend of $0.40, translating into a 3.98% yield. In terms of forward EV/EBITDA, IGT’s 6.56x is 20.7% lower than the industry average of 8.27x. The stock’s 4.45x forward P/CF ratio is 49.2% lower than the industry average of 8.75x.
Analysts expect IGT’s EPS to be $1.62 in fiscal 2023, which represents a 25.6% year-over-year increase. It surpassed the consensus EPS estimates in each of the trailing four quarters. Its revenue is expected to increase 11.6% year-over-year to $1.03 billion for the current quarter ending June 30, 2022. The stock has soared 7.1% over the past nine months to close yesterday’s trading session at $20.11.
IGT’s POWR Ratings reflect this promising outlook. The company has an overall rating of B, which translates to Buy in our proprietary rating system. The stock has a B grade for Value and Quality.
Within the Entertainment - Casinos/Gambling industry, IGT is ranked #3. Click here to see all the POWR Ratings for IGT (Stability, Momentum, Growth, and Sentiment).
Kohl's Corporation (KSS)
KSS operates as a retail company in the United States. It offers branded apparel, footwear, accessories, beauty, and home products through its approximately 1,100 stores and a website www.Kohls.com. The company provides its products primarily under the brand names of Apt. 9, Croft & Barrow, Jumping Beans, and SO. It has a market capitalization of $5.35 billion.
On May 19, 2022, Michelle Gass, Kohl’s CEO, said, “We continue to expect our business to improve as the year progresses, with growth in the second half as we benefit from the roll out of 400 additional Sephora stores, enhanced loyalty rewards and further investment in our stores."
KSS’ revenues decreased 4.4% year-over-year to $3.72 billion for the fiscal first quarter ended April 30, 2022. However, its total assets grew 3.8% year-over-year to $15.25 billion. Also, its EPS came in at $0.11, up 22% year-over-year.
The company pays an annual dividend of $1.25, translating into a 4.64% yield. In terms of forward P/S, KSS’ 0.29x is 67.4% lower than the industry average of 0.90x. The stock’s 3.39x forward P/CF ratio is 61.3% lower than the industry average of 8.75x.
For fiscal 2024, analysts expect KSS’ EPS to come in at $7.70, representing a 7.2% year-over-year increase. In addition, it surpassed Street EPS estimates in each of the trailing four quarters. The company’s revenue is expected to increase 2.4% year-over-year to $18.91 billion in fiscal 2023.
It’s no surprise that KSS has an overall B rating, which equates to Buy in our POWR Ratings system. The stock has an A grade for Value and Quality and a B grade for Growth.
Click here to see KSS’ rating for Momentum, Stability, and Sentiment as well. KSS is ranked #16 out of 68 stocks in the A-rated Fashion & Luxury industry.
NRZ shares were trading at $10.84 per share on Thursday afternoon, down $0.01 (-0.09%). Year-to-date, NRZ has gained 3.57%, versus a -17.48% rise in the benchmark S&P 500 index during the same period.
About the Author: Nimesh Jaiswal
Nimesh Jaiswal's fervent interest in analyzing and interpreting financial data led him to a career as a financial analyst and journalist. The importance of financial statements in driving a stock’s price is the key approach that he follows while advising investors in his articles.
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