TIM SA-ADR (NYSE:TIMB): A Prime Candidate for Value Investors Seeking Undervalued Stocks

In the world of value investing, the search for undervalued companies is a central strategy for those aiming to build wealth over time. This method, established by Benjamin Graham and made famous by investors like Warren Buffett, centers on finding stocks trading for less than their intrinsic value, often identified by strong basics that the market might have missed for a short period. One way to find these chances is through organized filtering, like the "Decent Value" screen, which looks for companies with high valuation ratings while also keeping good scores in profitability, financial soundness, and expansion. These measures help investors steer clear of value traps and find businesses with the possibility for price growth as the market fixes its errors.

TIM SA-ADR (NYSE:TIMB), a top telecommunications provider in Brazil, recently appeared from this kind of filtering process. The company’s basic profile indicates it could be an interesting option for value-focused investors, especially considering its present valuation numbers and operational advantages. A detailed fundamental analysis report offers a view into how TIMB matches the ideas of value investing.

Valuation Metrics

Value investors look for stocks trading at a discount to their real worth, and TIMB’s valuation numbers show it might meet this idea. The company’s basic valuation score of 7 out of 10 points to several positive data items:

• A Price/Earnings (P/E) ratio of 15.20, which is lower than 71.43% of others in its industry.
• A forward P/E ratio of 11.91, indicating sensible expectations for future earnings.
• A good Enterprise Value to EBITDA ratio, with 80.95% of industry rivals valued higher.

These numbers are important in value investing because they help spot differences between market price and the actual business value. A lower P/E ratio, along with positive earnings expectations, often shows a stock is priced low compared to its earnings ability, a main point value investors use to measure safety margin.

Profitability Strength

Profitability is another key part for value investors, as it shows a company’s capacity to create returns and maintain operations. TIMB’s profitability score of 7 out of 10 points to several strong areas:

• Return on Invested Capital (ROIC) of 12.64%, doing better than 95.24% of others in its industry.
• A profit margin of 13.92%, placing it with the best in its sector.
• Steady positive earnings and cash flow over the last five years.

For value investors, high profitability not only backs the idea of intrinsic value but also lowers the chance of lasting capital loss. A company with strong returns on capital is more able to handle economic slumps and increase value over time, fitting with the long-term view of value plans.

Financial Health Considerations

While value investing focuses on low valuation, financial soundness makes sure a company can handle difficulties without risking its stability. TIMB’s health score of 5 out of 10 shows a varied but acceptable situation:

• A good Debt-to-FCF ratio of 1.84, showing the company could settle its debts fast using free cash flow.
• Betterment in the debt-to-assets ratio over the past year.
• Worries about liquidity, with current and quick ratios under 1, indicating possible short-term bill pressures.

Even if not perfect, TIMB’s health numbers are acceptable for a value investment case, especially with its strong cash flow creation and average debt levels. Value investors sometimes agree to some health compromises when a safety margin is present in other areas, like in valuation or profitability.

Growth Prospects

Expansion is the last part of the picture, as it supports the idea that intrinsic value will rise over time. TIMB’s growth score of 4 out of 10 points to average but positive directions:

• Earnings per share (EPS) growth of 15.50% over the last year and a typical yearly growth rate of 10.47% over several years.
• Revenue growth of 5.32% year-over-year, with a past average of 7.93%.
• Expected future EPS growth of 11.42%, though revenue growth might reduce a bit.

For value investors, steady expansion helps reduce the difference between market price and intrinsic value. Even small growth, when paired with low valuation, can result in important returns as the market sees the company’s actual worth.

TIM SA-ADR offers an interesting case for value investors, mixing good valuation, firm profitability, acceptable financial soundness, and sensible expansion. While it has risks, such as liquidity worries, the stock’s basic profile suggests it might be priced low compared to its peers and future possibility. Investors using a value plan often look for these chances, where the safety margin seems enough to support the investment.

For those wanting to look into similar chances, more results from the "Decent Value" screen are available here.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should conduct their own research and consult with a financial advisor before making any investment decisions.