3 Stocks Trading Below Earnings Power Value

When screening the market for stocks that are trading at or below their fair prices, one tool investors can use is the earnings power value (EPV).

The EPV was created by Bruce Greenwald, a former professor at Columbia University and a well-known value investor. Greenwald was looking for ways to bypass the series of guesswork choices that must be made when trying to evaluate the intrinsic value of a stock through the discounted cash flow valuation model. The EPV is calculated as the adjusted earnings divided by the weighted average cost of capital.

The stocks listed below seem fairly priced as their share prices are trading lower than their respective EPVs.

The Western Union Co

The first stock that holds the criteria is The Western Union Co (

WU, Financial), a Denver-based provider of domestic and international money transfers through its global network of 500,000+ outside agents.

The Western Union Co’s EPV is $28.89 per share (as of the June 2021 quarter), which is above the share price of $20.80 as of early trading on Monday, for a margin of safety of about 28.14%.

Due to a 5.6% drop in the share price which happened over the past year, the market capitalization is $8.45 billion. The 52-week range is $19.07 to $26.61.

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GuruFocus has assigned a score of 4 out of 10 to the company’s financial strength and 8 out of 10 to its profitability.

BlackRock Inc. is a top fund holder of the company with 12.77% of shares outstanding. It is followed by VANGUARD GROUP INC with 11.81% and Capital Research Global Investors with 5.18%.

Federated Hermes Inc

The second stock that holds the criteria is Federated Hermes Inc (

FHI, Financial), a Pittsburgh, Pennsylvania-based publicly owned asset management firm serving individuals, financial service companies and investment companies.

Federated Hermes Inc’s EPV is $43.74 per share (as of the June 2021 quarter), which is above the share price of $31.80 as of early trading on Monday, for a margin of safety of 27.37%.

Following a 45.62% increase in the share price that happened over the past year, the market capitalization now trades near $3.09 billion. The 52-week range is $21 to $34.74.

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GuruFocus has assigned a score of 7 out of 10 to the company’s financial strength rating and 8 out of 10 to its profitability rating.

BlackRock Inc. is a top fund holder of the company, as it owns 12.91% of shares outstanding. It is followed by VANGUARD GROUP INC with 9.49% and FMR LLC with 3.94%.

Usana Health Sciences Inc

The third stock that holds the criteria is Usana Health Sciences Inc (

USNA, Financial), a Salt Lake City, Utah-based manufacturer and seller of nutritional and personal care products.

Usana Health Sciences Inc’s EPV is $130.35 per share (as of the June 2021 quarter), which is above the share price of $91.50 as of early trading on Monday, determining a margin of safety of about 29.81%.

After the share price has increased 23.24% over the past year, the market capitalization is now approximately $1.83 billion. The 52-week range is $72.03 to $107.85.

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GuruFocus has assigned a score of 9 out of 10 to both the company’s financial strength and its profitability.

BlackRock Inc. dominates in the group of the top fund holders of the company with 9.35% of shares outstanding. It is followed by


Jim Simons
(Trades, Portfolio) with 7.72% and VANGUARD GROUP INC with 7.46% of shares outstanding.

Disclosure: I have no positions in any securities mentioned.

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