The low valuation multiples for value stocks provide a margin of safety that growth stocks rarely offer. However, the challenge lies in determining whether these cheap assets are genuinely undervalued or simply on sale due to their potentially deteriorating business models.
This distinction between true value and value traps can challenge even the most skilled investors. Luckily for you, we started StockStory to help you uncover exceptional companies. Keeping that in mind, here is one value stock trading at a big discount to its intrinsic value and two with little support.
Two Value Stocks to Sell:
Cars.com (CARS)
Forward EV/EBITDA Ratio: 3.6x
Originally started as a joint venture between several media companies including The Washington Post and The New York Times, Cars.com (NYSE: CARS) is a digital marketplace that connects new and used car buyers and sellers.
Why Are We Wary of CARS?
- Increasing competition is redirecting attention to other platforms as it failed to grow its dealer customers over the last two years
- Estimated sales growth of 1.9% for the next 12 months implies demand will slow from its three-year trend
- Earnings per share have contracted by 1.8% annually over the last three years, a headwind for returns as stock prices often echo long-term EPS performance
At $12.45 per share, Cars.com trades at 3.6x forward EV/EBITDA. Read our free research report to see why you should think twice about including CARS in your portfolio.
Wabash (WNC)
Forward P/E Ratio: 14.4x
With its first trailer reportedly built on two sawhorses, Wabash (NYSE: WNC) offers semi trailers, liquid transportation containers, truck bodies, and equipment for moving goods.
Why Are We Out on WNC?
- Demand cratered as it couldn’t win new orders over the past two years, leading to an average 36.2% decline in its backlog
- Earnings per share decreased by more than its revenue over the last five years, showing each sale was less profitable
- High net-debt-to-EBITDA ratio of 8× increases the risk of forced asset sales or dilutive financing if operational performance weakens
Wabash is trading at $10.82 per share, or 14.4x forward P/E. Check out our free in-depth research report to learn more about why WNC doesn’t pass our bar.
One Value Stock to Watch:
Light & Wonder (LNW)
Forward P/E Ratio: 13.1x
With names as crazy as Ultimate Fire Link Power 4 for its products, Light & Wonder (NASDAQ: LNW) is a gaming company supplying the casino industry with slot machines, table games, and digital games.
Why Are We Fans of LNW?
- Excellent operating margin of 21.4% highlights the efficiency of its business model
- Share repurchases over the last five years enabled its annual earnings per share growth of 25.9% to outpace its revenue gains
- Rising returns on capital show the company is starting to reap the benefits of its past investments
Light & Wonder’s stock price of $88.99 implies a valuation ratio of 13.1x forward P/E. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free.
High-Quality Stocks for All Market Conditions
Donald Trump’s April 2025 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.
The smart money is already positioning for the next leg up. Don’t miss out on the recovery - check out our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today
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