Companies, such as Overseas Shipholding Group, trading at a market price below their true values are considered to be undervalued. There’s a few ways you can determine how much a company is actually worth. The most popular methods include discounting the company’s cash flows it is expected to create in the future, or comparing its price to its peers or the value of its assets. The discrepancy between the price and value means investors have an opportunity to buy shares at a discount. Below are the stocks I believe are undervalued on all criteria, based on their latest financial data.
Overseas Shipholding Group, Inc. (NYSE:OSG)
Overseas Shipholding Group, Inc. owns and operates a fleet of oceangoing vessels engaged in the transportation of crude oil and petroleum products in the United States. Formed in 1948, and headed by CEO Samuel Norton, the company currently employs 882 people and with the company’s market cap sitting at USD $138.83M, it falls under the small-cap group.
OSG’s shares are currently trading at -47% lower than its actual value of $3.5, at the market price of $1.85, according to my discounted cash flow model. The difference between value and price signals a potential opportunity to buy OSG shares at a discount. In terms of relative valuation, OSG’s PE ratio is around 2.4x relative to its oil and gas peer level of 13.8x, suggesting that relative to its comparable set of companies, you can buy OSG for a cheaper price. OSG is also in great financial shape, with near-term assets able to cover upcoming and long-term liabilities. The stock’s debt-to equity ratio of 190% has been falling over time, indicating its ability to pay down its debt. Dig deeper into Overseas Shipholding Group here.
Pacific West Bank (OTCPK:PWBO)
Pacific West Bank provides banking products and services to small and medium-sized businesses, and individuals in the state of Oregon. The company currently employs 16 people and with the stock’s market cap sitting at USD $8.48M, it comes under the small-cap category.
PWBO’s shares are currently floating at around -83% beneath its value of $71.28, at a price tag of $12, according to my discounted cash flow model. This mismatch indicates a chance to invest in PWBO at a discounted price. Furthermore, PWBO’s PE ratio stands at around 2.6x while its banks peer level trades at 17.3x, suggesting that relative to its peers, you can purchase PWBO’s stock for a lower price right now. PWBO also has a healthy balance sheet, as near-term assets sufficiently cover liabilities in the near future as well as in the long run. More detail on Pacific West Bank here.
Goodrich Petroleum Corporation (AMEX:GDP)
Goodrich Petroleum Corporation, an independent oil and natural gas company, engages in the exploration, development, and production of oil and natural gas. Founded in 1995, and now led by CEO Walter Goodrich, the company employs 47 people and with the stock’s market cap sitting at USD $114.24M, it comes under the small-cap stocks category.
GDP’s shares are now hovering at around -82% under its intrinsic value of $60.41, at a price of $10.84, based on my discounted cash flow model. The divergence signals an opportunity to buy GDP shares at a low price. In terms of relative valuation, GDP’s PE ratio is around 3x against its its oil and gas peer level of 13.8x, indicating that relative to its peers, GDP’s shares can be purchased for a lower price. GDP is also a financially healthy company, as near-term assets sufficiently cover liabilities in the near future as well as in the long run. The stock’s debt-to equity ratio of 93% has been reducing over time, indicating GDP’s ability to reduce its debt obligations year on year. Continue research on Goodrich Petroleum here.For more financially sound, undervalued companies to add to your portfolio, you can use our free platform to explore our interactive list of undervalued stocks.