Amid the Russia-Ukraine war, concerns over rising economic sanctions and the ban on importing Russian oil have caused the benchmark stock indexes to decline into correction territory. Although the U.K. and the U.S. announced that they have sufficient oil supplies to meet demand in the near future, the stock market is expected to remain in a bearish mood for the foreseeable future due to deepening supply chain disruptions and rising inflation.
Given this backdrop, high-quality value stocks are attracting investors’ attention because they tend to resist market downturns. This is evidenced by the American Century STOXX U.S. Quality Value ETF’s (VALQ) 9.7% gains over the past year.
We think fundamentally strong stocks Anthem, Inc. (ANTM), Cigna Corporation (CI), América Móvil, S.A.B. de C.V. (AMX), Emcor Group, Inc. (EME), and Crane Co. (CR) look undervalued at the current price levels. So, it could be wise to bet on them now.
Anthem, Inc. (ANTM)
ANTM in Indianapolis, Ind., is a health benefits company that offers a broad spectrum of network-based managed care plans and services to large and small groups, individuals, Medicaid, and Medicare markets. The company provides an array of specialty and other insurance products and services, such as pharmacy and radiology benefits management, dental, vision, life and disability insurance benefits, and analytics-driven personal health care.
On Nov. 10, 2021, ANTM agreed to acquire Integra Managed Care, a Managed Long-Term Care Plan designed for adults living with long-term disabilities. Currently serving more than 40,000 Medicaid members, Integra’s acquisition aligns with ANTM’s goal of growing its Medicaid business and will be added to ANTM’s Government Business Division upon the closure of the acquisition by the end of the 2022 second quarter.
For its fiscal year 2021 fourth quarter, ended Dec. 31, 2021, ANTM’s total revenues came in at $138.64 billion, representing a 13.8% year-over-year improvement. The company’s pre-tax income came in at $7.93 billion for the quarter, indicating a 27% year-over-year improvement. While its adjusted net earnings increased 98% year-over-year to $1.26 billion, its adjusted EPS rose 102.4% to $5.14. The company had $4.88 billion in cash and cash equivalents as of Dec. 31, 2021.
Analysts expect ANTM’s EPS to improve 9.6% year-over-year to $28.47 for its fiscal year 2022, ending Dec. 31, 2022. It surpassed the Street’s EPS estimates in each of the trailing four quarters. The $152.84 billion consensus revenue for the same fiscal year represents an 11.6% rise from the prior-year period. ANTM’s EPS is expected to grow at a 12.9% rate per annum over the next five years.
Over the past year, the stock has gained 34.3% in price and closed yesterday’s trading session at $456.07. ANTM’s trailing-12-month gross profit margin, ROE, and ROTC are 26%, 17.6%, and 9.8%, respectively.
Its 15.97x non-GAAP forward P/E is 21.4% lower than the 20.31x industry average. And in terms of forward EV/EBIT, ANTM is currently trading at 13.78x, which is 21.2% lower than the 17.49x industry average.
ANTM’s POWR Ratings reflect this promising outlook. The stock has an overall A rating, which equates to Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
The stock has a B grade for Growth, Stability, Value, Sentiment, and Quality. Click here to see the additional ratings for ANTM’s Momentum.
ANTM is ranked #1 of 11 stocks in the B-rated Medical - Health Insurance industry.
Cigna Corporation (CI)
CI is a health services company based in Bloomfield, Conn., that offers medical, dental insurance, and related products and services. The company distributes its products and services through insurance brokers and consultants, directly to employers, and through private and public exchanges.
On Dec. 20, 2021, CI, and Spartanburg Regional Healthcare System, one of South Carolina’s largest healthcare systems, reached a multi-year agreement that enables CI customers to gain access to Spartanburg Regional’s hospitals, facilities, and physician network for quality care, effective Jan.1, 2022. Both companies expect to deliver affordable and high-quality care to the upstate community.
For its fiscal year 2021 second quarter, ended Dec. 31, 2021, CI’s adjusted revenues increased 9.6% year-over-year to $45.68 billion. The company’s adjusted income from operations came in at $1.57 billion, up 24.1% from the prior-year period. CI’s EPS increased 35.9% year-over-year to $4.77. And as of Dec. 31, 2021, the company had $5.08 billion in cash and cash equivalents.
The $22.49 consensus EPS estimate for its fiscal year 2022, ending Dec. 31, 2022, represents a 9.9% year-over-year improvement. It surpassed the Street’s EPS estimates in each of the trailing four quarters, which is impressive. Analysts expect the company’s revenue to be $179.04 billion for the same quarter, indicating a 2.9% rise from the prior-year period. CI’s EPS is expected to grow at an 11.2% rate per annum over the next five years.
CI stock has declined 2.9% in price over the past year and ended yesterday’s trading session at $229.10. Its trailing-12-month gross profit margin, ROE, and ROTC are 13.3%, 11.1%, and 6.3%, respectively.
In terms of non-GAAP forward P/E, CI is currently trading at 10.58x, which is 47.9% lower than the 20.31x industry average. And in terms of forward EV/EBIT, CI is currently trading at 12.73x, which is 27.2% lower than the 17.49x industry average.
CI’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which equates to Strong Buy in our proprietary rating system.
It has a B grade for Growth, Value, Stability, Sentiment, and Quality. Click here to see the additional ratings for CI’s Momentum.
CI is ranked #3 of 11 stocks in the B-rated Medical - Health Insurance industry.
América Móvil, S.A.B. de C.V. (AMX)
AMX is a Mexico City, Mexico-based telecommunications services company that offers mobile and fixed-line voice services, wireless and fixed data services, internet access and pay television, sales of equipment, accessories, computers, and other related services worldwide. It sells its brands through a network of retailers and service centers to retail customers and sales force to corporate customers.
On Sept. 29, 2021, AMX and leading telecommunications company Liberty Latin America Ltd. (LILA) agreed to combine their Chilean operations, Claro Chile and VTR, to form a 50/50 joint venture (JV). This JV is expected to create a business with greater scale, product diversification, and a capital structure that will enable significant investment in fixed fiber footprint expansion to be at the forefront of 5G mobile delivery. By 2025, the JV could serve more than 6 million homes through its fixed network.
For its fiscal year 2021 fourth quarter, ended Dec. 31, 2021, AMX’s total revenue increased 7.7% year-over-year to Mex$227.32 billion ($10.73 billion). The company’s adjusted EBITDA came in at Mex$82.87 billion ($3.91 billion), representing an 8.9% rise from the year-ago period. Its net income came in at Mex$135.59 billion ($6.40 billion) for the quarter, indicating a 263.4% rise from the prior-year period. AMX’s earnings per ADR were $2.01, up 272.2% from the year-ago period.
The $1.55 consensus EPS estimate for its fiscal year 2022, ending Dec. 31, 2022, represents a 154.1% rise from the prior-year period. Its revenue is estimated to be $47.67 billion for the same fiscal year, indicating a 0.7% year-over-year improvement. Analysts expect the company’s EPS to grow at a rate of 22.9% per annum over the next five years.
Over the past year, the stock has gained 44.8% in price to close yesterday’s trading session at $18.67. AMX’s trailing-12-month gross profit margin, ROE, and ROTC are 41.1%, 19.3%, and 9.7%, respectively.
In terms of non-GAAP forward P/E, AMX is currently trading at 14.51x, which is 15% lower than the 17.07x industry average. And its 10.07x forward EV/EBIT is 35.5% lower than the 15.62x industry average.
AMX’s POWR Ratings reflect its solid prospects. It has an overall rating of A, which equates to Strong Buy in our proprietary rating system.
The stock has a B grade for Growth, Value, Stability, and Quality. In addition to the POWR Ratings grades we have just highlighted, one can see the ratings for AMX’s Sentiment and Momentum here.
AMX is ranked #1 of 47 stocks in the A-rated Telecom - Foreign industry.
Emcor Group, Inc. (EME)
EME provides electrical and mechanical construction and facilities services. The Norwalk, Conn., company specializes in designing, installing, integrating, and start-up distribution systems for electrical power, lighting systems, and low-voltage systems, such as fire and security alarms, voice and data communication, ventilation, and plumbing and piping. In addition, it provides industrial services for the oil, gas, and petrochemical industries.
On Aug. 3, 2021, EME’s Shambaugh & Son L.P. subsidiary constructed the building shell and support utilities for the dairy plant MWC’s 400,000 square-foot cheese processing and whey drying facility. Shambaugh is a well-known self-performing design-builder of complex food, beverage, and pharmaceutical processing facilities. By designing the cheese processing and whey drying facility of the largest company in the Michigan dairy industry, EME should gain further market reach.
For its fiscal year 2021 fourth quarter, ended Dec. 31, 2021, EME’s revenues increased 15.7% year-over-year to $2.64 billion. The company’s gross profit came in at $403.04 million, indicating a 5% gain over the prior-year period. Its non-GAAP operating income came in at $143.02 million, representing a 3.9% year-over-year improvement. And its non-GAAP EPS increased 1.6% year-over-year to $1.89. The company had cash and cash equivalents of $821.35 million as of Dec. 31, 2021.
The $7.05 consensus EPS estimate for its fiscal year 2022 ending Dec. 31, 2022, indicates a 10.2% year-over-year improvement. It surpassed the Street’s EPS estimates in each of the trailing four quarters. Analysts expect the company’s revenue to reach $9.90 billion for the same quarter, representing a 12.6% improvement from the year-ago period. EME’s EPS is expected to grow at a marginal rate per annum over the next five years.
Over the past year, the stock has gained 5% in price and ended yesterday’s trading session at $112.37. EME’s trailing-12-month gross profit margin, ROE, and ROTC are 15.2%, 17.8%, and 12.4%, respectively.
In terms of non-GAAP forward P/E, EME is currently trading at 14.68x, which is 14.5% lower than the 17.16x industry average. And its 9.81x forward EV/EBIT is 35.3% lower than the 15.17x industry average.
EME’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which equates to Strong Buy in our proprietary rating system.
It has a B grade for Value, Quality, and Stability. Click here to see the additional ratings for EME (Growth, Sentiment, and Momentum).
EME is ranked #6 of 88 stocks in the B-rated Industrial - Services industry.
Click here to check out our Industrial Sector Report for 2022
Crane Co. (CR)
CR manufactures and sells engineered industrial products internationally. The Stamford, Conn., company operates through three segments: Aerospace & Electronics; Process Flow Technologies; and Payment & Merchandising Technologies. It offers vending machines, airplane braking devices, pumps, valves, and other industrial goods, and serves aerospace manufacturing, power generation, hydrocarbon processing, commercial and residential building, plumbing, and food and beverage production industries.
For its fiscal year 2021 fourth quarter, ended Dec. 31, 2021, CR’s net sales increased 12.7% year-over-year to $770.50 million. The company’s adjusted operating profit came in at $93.10 million, up 33% from the prior-year period. While its adjusted net income increased 36.5% year-over-year to $74 million, its adjusted EPS grew 35.9% to $1.25. As of Dec. 31, 2021, the company had $478.60 million in cash and cash equivalents.
The $7.37 consensus EPS estimate for its fiscal year 2022, ending Dec. 31, 2022, represents a 12.5% year-over-year improvement. It surpassed the Street’s EPS estimates in each of the trailing four quarters. Analysts expect the company’s revenue to be $3.33 billion for the same fiscal year, indicating a 4.7% rise from the prior-year period. CR’s EPS is expected to grow at a 9.5% rate per annum over the next five years.
CR has gained 9.9% in price over the past year and ended yesterday’s trading session at $99.63. Its trailing-12-month gross profit margin, ROE, and ROTC are 39%, 23.4%, and 10.3%, respectively.
In terms of non-GAAP forward P/E, CR is currently trading at 13.52x, which is 21.2% lower than the 17.16x industry average. And CR’s 10.75x forward EV/EBIT is 29.1% lower than the 15.17x industry average.
CR’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which equates to Strong Buy in our proprietary rating system.
It has a B grade for Value, Sentiment, and Stability. Click here to see the additional ratings for CR (Growth, Momentum, and Stability).
CR is ranked #1 of 77 stocks in the B-rated Industrial - Machinery industry.
Click here to check out our Industrial Sector Report for 2022
ANTM shares were trading at $461.50 per share on Wednesday afternoon, up $5.43 (+1.19%). Year-to-date, ANTM has declined -0.44%, versus a -9.95% rise in the benchmark S&P 500 index during the same period.
About the Author: Sweta Vijayan
Sweta is an investment analyst and journalist with a special interest in finding market inefficiencies. She’s passionate about educating investors, so that they may find success in the stock market.
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