Do you look for value when considering different stocks? If so, here are some value ideas to keep in mind. To illustrate, we ran a screen by starting with stocks of the S&P 500 paying dividend yields above 1% and sustainable payout ratios below 50%. We then screened these names for those that appear undervalued by two measures: levered free cash flow/enterprise value, and the Graham Number.
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 Graham Number was created by the "godfather of value investing" Benjamin Graham, and it represents a stock's maximum fair value. It is based off of a stock's EPS and book value per share (BVPS).
Source: Investopedia
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