In our last Number Cruncher, we discussed how SM Energy Company (SM:NYSE), Kroger Company (KR:NYSE), & Lockheed Martin Corporation (LMT:NYSE) are companies with compelling valuations based on modest future growth value (FGV) to enterprise value (EV).
SM Energy Company currently has an SP Score of 72, which has increased significantly by 8 in the past 90 days. The score encompasses a performance score of 71.8 and a risk score of 28.1. SM Energy’s strongest factors compared to its peers are value and growth with respective scores of 81 and 70. Although sales have decreased in the past year, the company’s 5-year average sales growth is 25.6%. Additionally, their dividend yield increased by 82.8% in the past year.
The economic performance section of SM Energy’s executive summary exhibits the company’s sudden shift in the past couple of years. Notably, their net operating profit after taxes (NOPAT) has increased exponentially in just a few years going from 14 million in December 2020 to 850 million in December 2023. The sudden changes are also reflected in the return on capital and economic value-added metrics. Thus, the Price to Earnings Ratio is currently 6.5, significantly lower than its 5-year average of 35.4. If SM Energy can sustain these numbers going forward, this could represent an interesting value opportunity for investors.
The Kroger Company currently has an SP Score of 75 which has increased by 5 in the past 90 days. The SP Score is based on a performance score of 75.3 and a risk score of 23.0. Currently, Korger’s top factors are quality, scoring 77, and volatility, scoring 68. Thus, the company has shown steady growth in sales and dividend with 5-year averages of 5.3% and 2.3% respectively and low volatility measured by a beta of 0.51.
The performance vs risk chart places Kroger far ahead of its peers based on the best combination of high performance and low risk. The company has consistently increased its return on capital in recent years, sitting at 13.1% as of January 2024. Additionally, their Market Value Added (MVA) has nearly doubled in the past year to 39.5M, which is in the 97th percentile of their sector. Kroger continues to be a strong consumer staple company leading its peers at a compelling valuation.
Lockheed Martin Corporation’s current SP Score is 77, growing by 1 in the past 90 days. Their performance score is 81.9 and their risk score is 23.8. The company’s strongest factors compared to its peers are quality and yield with respective scores of 81 and 59. Lockheed Martin’s dividend yield growth has averaged 5.1% in the past 5 years with a current payout of 47.8%.
Lockheed Martin’s is demonstrating strong shareholder value based on our intrinsic value estimates, which use the Economic Value Added (EVA) framework. When analysing the last 12 quarter values displayed in StockPointer’s executive summary, LMT’s price to intrinsic value in December 2023 was 0.56, the lowest it has been in the past 5 years. This is in part due to their consistent return on capital combined with a decreasing cost of capital. These metrics could indicate compelling value.
f you have any questions about the article, feel free to contact Anthony:
amenard@inovestor.com
