4 shares below book value

Stocks that trade below book value are there for a reason. Nobody likes them because, for example, the profits this year are terrible. Or it could be that large institutional investors simply shun an industry as a whole and this company belongs in that industry. Some of them are too small for large funds, so they are simply ignored in the search.

The other side of the coin is that these companies appear on other screens as possible takeover or merger candidates. When a title falls below the book and it remains a business in operation, sometimes other companies in the same industry find them, well, valuable. None of this is guaranteed, but it’s the allure of “below the book” stocks that seem unwanted and unloved.

Here a four that can match the profile.

Bulk Eagle Shipping

Eagle Bulk Shipping Inc. (CHURCH, Financial) is involved in maritime transport or, as its website puts it, “provides optimized global transport of dry bulk goods”. With headquarters in Stamford, Conn. and operations around the world, the stock now trades at a 15% discount to its book value. The price-to-earnings ratio of only 6 is significantly lower than that of the stock market as a whole.

The price to sales ratio is 1.2 and the price to free cash flow ratio is 4.28. Earnings per share this year are down 59%. The growth rate of earnings per share over the last five years is positive at 69.90%. Eagle Bulk Shipping’s long-term debt exceeds its equity. The dividend yield of 19.79% is so high that it may question whether it can continue at this level. Average daily volume is light at around 230,000 shares. GuruFocus’ financial data summary looks like this:

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Horace Mann Educators

Horace Mann Educators Corp. (HMN, Financial) is in the field of property and casualty insurance, as well as supplementary life and student loans. The Springfield, Illinois-based company is trading with a price-to-earnings ratio of 10 and at 87% of its book value. The price to sales ratio is 1.13 and the price to free cash flow ratio is 12.93.

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Earnings per share this year are negative 29.4%. The earnings record for the past five years is positive at 7.10%. Investors receive a dividend yield of 3.35%. Average daily volume is light for a company listed on the New York Stock Exchange at around 189,000 shares. GuruFocus’ financial summary of educators Horace Mann is here:

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ViacomCBS

ViacomCBS Inc. (VIAC, Financial) is a Nasdaq-listed entertainment company whose shares are now available for purchase at a 2% discount on book value. The price/earnings ratio is at a relatively low level (for the sector) 6.6. Earnings per share growth this year is -26%. Earnings per share growth over the past five years is slow at 3.3%.

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The amount of long-term debt exceeds equity. ViacomCBS pays a dividend of 3.07%. The 8.58% short float is a relatively high level – any rally due to forced short coverage could be fueled by such a level. Deutsche recently changed the stock from ‘hold’ to ‘buy’. Here is the GuruFocus summary of ViacomCBS finances:

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Olympic steel

Olympic Steel Inc. (ZEUS, Financial) is, yes, a Nasdaq-listed steel company headquartered in Cleveland. In business since 1954, Olympic trades at just 61% of its book value. The price/earnings ratio is 2.48 and Wall Street puts its price/earnings ratio at 12.

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The growth in earnings per share this year is horrible: it’s -245%. Nevertheless, earnings growth over the last five years is 34.29%. Equity is less than long-term debt. Investors receive a dividend yield of 0.38%. The average daily volume is only around 89,000 shares. GuruFocus’ financial summary on Olympic Steel looks like this:

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