Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 3 stocks made the list for top value stocks in the Office Equipment industry. Those looking for value stocks to add to their portfolio may want to use this list as a starting point for further investment research.

Why Focus on Undervalued Office Equipment Stocks?

Value investors seek to buy stocks at a discount to their intrinsic value. Long-term returns show that such strategies are advantageous. Value stocks, as a group, tend to outperform growth stocks over extended periods of time. Typically, value investors perform financial analysis of numerous metrics, don’t follow the herd and are long-term investors.

AAII’s A+ Investor Value Grade is derived from a stock’s Value Score. The Value Score is the percentile rank of the average of the percentile ranks of the price-to-sales ratio, price-earnings ratio, enterprise-value-to-EBITDA (EV/EBITDA) ratio, shareholder yield, price-to-book-value ratio and price-to-free-cash-flow ratio. The score is variable, meaning it can consider all six ratios or, should any of the six ratios not be valid, the remaining ratios that are valid. To be assigned a Value Score, stocks must have a valid (non-null) ratio and corresponding ranking for at least two of the six valuation ratios.

What Goes Into AAII’s Value Grade?

Stock evaluation requires access to huge amounts of data as well as the knowledge and time to sift through it all, make sense of financial ratios, read income statements and analyze recent stock movement. AAII created A+ Investor, a robust data suite that condenses data research in an actionable and customizable way suitable for investors of all knowledge levels, to help investors with that task.

AAII’s proprietary stock grades come with A+ Investor. These offer intuitive A–F grades for more than just value. It is possible for a stock to appear cheap based on one valuation metric but appear expensive on another. It is also possible for one valuation ratio to be associated with outperforming stocks during certain periods of time but not others. Some stocks may even have null values for certain metrics like the price-earnings ratio or the price-to-book ratio but not others. An example of this would be a company with losses instead of profits or a negative book value because of heavy borrowing. Negative earnings or book value result in non-meaningful ratios that are left blank or null.

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3 Undervalued Office Equipment Stocks

Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 3 undervalued stocks in the Office Equipment industry for Wednesday, August 21, 2024. Let’s take a closer look at their individual scores to see how they measure up against each other and the Office Equipment industry median.

The Value Grade is assigned based on how each stock’s composite valuation compares to all other stocks.

The process for assigning grades starts with each variable for a given stock. The percentile rankings for all valid ratios that a stock has are calculated. So, for instance, a stock could have a price-to-book ranking in the 43rd percentile, a price-earnings ranking in the 67th percentile, a price-to-sales ranking in the 23rd percentile, etc. Then, those rankings are averaged for each stock. (A minimum of two valid variables are required, though all six will be used if available.)

Once the average of the individual variables is calculated, that average is ranked against all stocks. Put another way, each stock’s composite valuation is compared to all other stocks. These ranks are then sorted into quintiles from the cheapest 20% (a grade of A) to the most expensive 20% (a grade of F).

As always, we recommend that you conduct proper due diligence and research before investing in any security. We also suggest that investors utilize numerous grades, not just value, when it comes to deciding whether a company is a good fit for their allocation needs.

Canon Inc (ADR)’s Value Grade

Value Grade:

Canon Inc. is mainly engaged in the development, production, sale of office equipment, imaging systems, medical systems, industrial equipment and the provision of related services. The Company operates in four business segments. The Office segment provides office multifunction machines, laser multifunction machines, laser printers, digital continuous slip printers, digital cut sheet planters, wide format printers, and document solutions. The Imaging System segment's products include lens-interchangeable digital cameras, compact digital cameras, digital video cameras, digital cinema cameras and others. The Industrial Equipment and Others segment provides semiconductor exposure devices, FPD exposure devices, vacuum thin film forming devices, organic EL display manufacturing devices, die bonders, micromotors, network cameras, handy terminals and others. The Medical System segment provides digital radiography, X-ray diagnostic equipment, ultrasound diagnostic equipment and others.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Canon Inc (ADR) has a Value Score of 68, which is considered to be undervalued.

When you look at Canon Inc (ADR)’s price-to-sales ratio at 1.08 compared to the industry median at 0.39, this company has a higher price relative to revenue compared to its peers. This could make Canon Inc (ADR)’s stock less attractive for value investors.

Canon Inc (ADR)’s price-earnings ratio is 16.19 compared to the industry median at 15.74. This means it has a higher share price relative to earnings compared to its peers. This could make Canon Inc (ADR) less attractive for value investors.

Now, let’s assess Canon Inc (ADR)’s EV/EBITDA ratio, also known as enterprise multiple. At 6.6, when compared to the industry median of 8.0, the company may be considered undervalued in relation to its peers. Value investors could use the enterprise multiple to identify stocks that are considered overvalued or undervalued relative to their industry.

Shareholder yield is the sum of a stock’s dividend yield (paid over previous 12 months minus special dividends) and the percentage of net share buybacks over the previous 12 months. Canon Inc (ADR)’s shareholder yield is higher than its industry median ratio of (1.08%). Value investors may look for an attractive shareholder yield because it can be a powerful tool for identifying if the company has a good management team.

As one of the most common value metrics, the price-to-book ratio evaluates a company’s current market price relative to its book value. Canon Inc (ADR)’s price-to-book ratio is higher than its industry median ratio of 0.70. This could make Canon Inc (ADR) less attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at Canon Inc (ADR)’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. Canon Inc (ADR)’s price-to-free-cash-flow ratio is higher than its industry median ratio of 11.16. This could make Canon Inc (ADR) less attractive because the higher P/FCF ratio indicates that Canon Inc (ADR) is undervalued. The P/FCF ratio metric can also be viewed over a long-term time frame to see if the company's cash flow to share price value is generally improving or worsening.

Eastman Kodak Co’s Value Grade

Value Grade:

Eastman Kodak Company is a manufacturer focused on commercial print and advanced materials and chemicals. It operates through three segments: Print, Advanced Materials and Chemicals, and Brand. The Print segment is comprised of five lines of business: the Prepress Solutions business, the PROSPER business, the Software business, the Electrophotographic Printing Solutions business and the VERSAMARK business. Print segment products include digital offset plate offerings and computer-to-plate imaging solutions, digital printing solutions using electrically charged toner-based technology, production press systems, consumables (primarily ink), inkjet components, software and services. Its Advanced Materials and Chemicals segment is comprised of four lines of business: Industrial Film and Chemicals business, Motion Picture business, Advanced Materials and Functional Printing business, and the Licensing and Analytical Services business. The Brand segment contains the brand licensing business.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Eastman Kodak Co has a Value Score of 66, which is considered to be undervalued.

Eastman Kodak Co’s price-earnings ratio is 9.7 compared to the industry median at 15.7. This means that it has a lower price relative to its earnings compared to its peers. This makes Eastman Kodak Co more attractive for value investors.

Eastman Kodak Co’s price-to-book ratio is higher than its peers. This could make Eastman Kodak Co less attractive for value investors when compared to the industry median at 0.70.

You can read more about Eastman Kodak Co’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Ricoh Co Ltd (ADR)’s Value Grade

Value Grade:

Ricoh Co Ltd is a Japan-based company mainly engaged in the development, production and sale of office printers, commercial printers and other devices. The Company operates in six business segments. The Office Printing segment engages in providing maintenance services and related consumables for multifunction devices, copiers, printers and others. The Office Service segment provides personal computers, servers, network-related equipment, related services and support. The Commercial Printing segment engages in providing customers with products and services related to digital printing. The Industrial Printing segment is engaged in manufacture and sale of inkjet heads, imaging systems, industrial printers and others. The Thermal segment is engaged in manufacture and sale of thermal paper and thermal transfer ribbons. The Others segment provides industrial optical parts modules, electrical equipment units and digital cameras. The Company is also involved in drug discovery business.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Ricoh Co Ltd (ADR) has a Value Score of 88, which is considered to be undervalued.

Ricoh Co Ltd (ADR)’s price-earnings ratio is 18.5 compared to the industry median at 15.7. This means that it has a higher price relative to its earnings compared to its peers. This makes Ricoh Co Ltd (ADR) less attractive for value investors.

Ricoh Co Ltd (ADR)’s price-to-book ratio is lower than its peers. This could make Ricoh Co Ltd (ADR) fairly attractive for value investors when compared to the industry median at 0.70.

You can read more about Ricoh Co Ltd (ADR)’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Other Office Equipment Stock Grades

Value is just one of the five Stock Grades included in our A+ Investor service. AAII members can see the top-graded stocks—those with grades of A or B for value, growth, momentum, earnings estimate revisions and quality—on the A+ Stock Grades Screener.

Also, if you want full access to all of AAII’s premium services, you can subscribe to one convenient bundled plan called AAII Platinum where you can try out A+ Investor, AAII Dividend Investing, the Stock Superstars Report, Growth Investing and VMQ Stocks. With the other premium services, you can dive deep into additional metrics, portfolios, commentary and information about Office Equipment stocks as well as other industrys.

Choosing Which of the 3 Best Office Equipment Stocks Is Right for You

Choosing which value stocks to invest in will ultimately depend on your individual goals and allocation; however, comparing similar value stocks in the same industry can help you analyze which might be better investments for you in the long run. So, let’s take a look at the Value Grade for all of our stocks.

• Canon Inc (ADR) stock has a Value Grade of B.
• Eastman Kodak Co stock has a Value Grade of B.
• Ricoh Co Ltd (ADR) stock has a Value Grade of A.

Now that you have a bit more background about each of the 3 undervalued stocks in the Office Equipment industry as well as their overall grades, it’s time for you to conduct additional research to see if these could fit your portfolio needs based on your goals and risk tolerance. AAII can help you figure out both and identify which investments align with what works best for you.

We do so through a program of education that teaches you to invest for yourself and become an effective manager of your own wealth—no more relying on others for your financial independence. You can rely on AAII for timeless articles on financial planning and stock-picking, unbiased research and actionable analysis that makes you a better investor.

A+ Investor adds to that qualitative teaching by giving you a powerful data suite that helps you whittle down investment decisions to find stocks, exchange-traded funds (ETFs) or mutual funds that meet your needs.

Additional Resources About Office Equipment Stocks

Want to learn more about Office Equipment stocks to see if they could be the right investment for you? Check out some additional resources and articles to help you on your financial journey.

• 3 Undervalued Office Equipment Stocks for Wednesday, August 21
• Why Pitney Bowes Inc.’s (PBI) Stock Is Up 4.17%
• 3 Undervalued Office Equipment Stocks for Friday, August 16
• 3 Undervalued Office Equipment Stocks for Wednesday, August 14

AAII Disclaimer

We make no representations or warranties that any investor will, or is likely to, achieve profits similar to those shown, because past, hypothetical or simulated performance is not necessarily indicative of future results. Before making an investment decision, you should consider your circumstances and whether the information on our content is applicable to your situation. This information was prepared in good faith and we accept no liability for any errors or omissions. The full disclaimer can be read here.