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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.
Image Source: Zacks Investment Research
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.
Image Source: Zacks Investment Research
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.