Looking for more metrics to evaluate a stock’s valuation and outlook? If so, let’s take a look at levered free cash flow and insider buying.
These tools can help to identify undervalued stocks. They can be used together or combined with other investment metrics.
How do they work? Let’s review:
Insider Buying – Significant net purchases over the last six months
Pretty self-explanatory… Insiders work for the company in question and their investment activity is closely monitored. Insiders usually have access to more information than us outsiders, and their investment activity in the company can tell us a lot about where they feel the business is heading.
The list below features names experiencing insider buying over the past six months (an indicator that insiders think the stock is undervalued).
Insider buying is represented as a percentage of shares float. Shares float is described as the total number of shares available for trading. It is calculated by subtracting restricted shares from outstanding shares.
Levered free cash flow (LFCF) to Enterprise Value Ratio
Levered free cash flow is the free cash flow after deducting interest payments on outstanding debt. Enterprise value is the sum of the firm’s value from all ownership sources: market cap, outstanding debt, and preferred shares. The higher the ratio, the more undervalued the company appears. The list below features names with a high LFCF/EV ratios.
We screened a list of stocks with market caps over $300 Million that met both of the above requirements at significant levels. We were left with a list of 5 names that we have detailed below.
Given this information, do you feel these names are undervalued? Use the list as a starting point for your own analysis.
Use the Turbo Chart to Compare the Performance of the First Two Companies in the List to the S&P 500:
1. Navarre Corporation (NAVR, Earnings, Analysts, Financials): A distributor and provider of complete logistics solutions to traditional and Internet-based retailers. Levered free cash flow/enterprise value at 20.09% (levered free cash flow at $9.78M and enterprise value at $48.67M). Net insider shares purchased over the last six months at 883.49K, which is 3.04% of the company’s 29.06M share float.
2. Parkway Properties Inc. (PKY, Earnings, Analysts, Financials): Engages in the operation, acquisition, ownership, management, and leasing of office properties. Market cap at $245.94M, most recent closing price at $11.22. Levered free cash flow/enterprise value at 10.11% (levered free cash flow at $89.29M and enterprise value at $883.15M). Net insider shares purchased over the last six months at 256.99K, which is 1.49% of the company’s 17.24M share float.
3. Sears Holdings Corporation (SHLD, Earnings, Analysts, Financials): Operates as a retailer in the United States and Canada. Market cap at $5.79B, most recent closing price at $54.36. Levered free cash flow/enterprise value at 13.90% (levered free cash flow at $1.07B and enterprise value at $7.70B). Net insider shares purchased over the last six months at 514.85K, which is 1.27% of the company’s 40.63M share float.
4. SL Industries Inc. (SLI, Earnings, Analysts, Financials): Engages in the design, manufacture, and marketing of power electronics, motion control, power protection, power quality electromagnetic, and specialized communication equipment in the United States and internationally. Market cap at $56.77M, most recent closing price at $13.78. Levered free cash flow/enterprise value at 18.52% (levered free cash flow at $11.42M and enterprise value at $61.65M). Net insider shares purchased over the last six months at 63.43K, which is 1.87% of the company’s 3.39M share float.
5. WebMD Health Corp. (WBMD, Earnings, Analysts, Financials): Provides health information services to consumers, physicians and other healthcare professionals, employers, and health plans through its public and private online portals, mobile platforms, and health-focused publications in the United States. Market cap at $745.28M, most recent closing price at $14.87. Levered free cash flow/enterprise value at 10.84% (levered free cash flow at $64.37M and enterprise value at $593.89M). Net insider shares purchased over the last six months at 1.01M, which is 2.98% of the company’s 33.86M share float.
6. Xerium Technologies Inc. (XRM, Earnings, Analysts, Financials): Engages in the manufacture and supply of consumable products used in the production of paper primarily in North America, Europe, South America, and the Asia-Pacific. Market cap at $57.04M, most recent closing price at $3.74. Levered free cash flow/enterprise value at 12.59% (levered free cash flow at $59.32M and enterprise value at $471.28M). Net insider shares purchased over the last six months at 131.50K, which is 1.26% of the company’s 10.47M share float.
Written by Rebecca Lipman. Insider and LFCF data sourced from Yahoo! Finance. All other data sourced from Finviz.
Use Kapitall’s Tools: Looking for ways to analyze this list?
Use this article snapshot as a launch pad (click here for help): Simply click on the links, and use Kapitall’s tab navigation to browse through the data…
Analyze These Ideas: Getting Started
- Read descriptions for all companies mentioned
- Access a performance overview for all stocks in the list
- Compare analyst ratings for the companies mentioned
- Compare analyst ratings to annual returns for stocks mentioned
- Real-Time Opinion: Scan the latest tweets about these companies (feed will open in a new window)
Dig Deeper: Access Company Snapshots, Charts, Filings
- Navarre Corporation (NAVR, Chart, Download SEC Filings)
- Parkway Properties Inc. (PKY, Chart, Download SEC Filings)
- Sears Holdings Corporation (SHLD, Chart, Download SEC Filings)
- SL Industries Inc. (SLI, Chart, Download SEC Filings)
- WebMD Health Corp. (WBMD, Chart, Download SEC Filings)
- Xerium Technologies Inc. (XRM, Chart, Download SEC Filings)
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