Factors that include high inflation, supply chain disruptions, and rising COVID-19 cases convinced investors and analysts that the 2021 fourth quarter would end on a low note. However, the quarter registered strong U.S. GDP growth. The economy achieved 5.7% growth last year, its strongest growth since 1984.

While the stock market remains volatile on concerns over high inflation and the Fed’s plans to raise rates aggressively this year, impressive fourth-quarter corporate earnings may cushion the benchmark indexes. According to FactSet, the S&P 500 is reporting earnings growth of more than 25% for the fourth straight quarter.

United Parcel Service, Inc. (UPS), MetLife, Inc. (MET), Capri Holdings Limited (CPRI), and Ralph Lauren Corporation (RL) have all gained significantly since reporting stellar results for their last completed quarter. However, considering their sound financials and growth prospects, these stocks still look undervalued at their current price levels. So, we think it could be wise to add these stocks to one’s portfolio now.

United Parcel Service, Inc. (UPS)

UPS in Seattle, Wash., provides letter and package delivery, transportation, logistics, and financial services worldwide. The company operates through three segments: U.S. Domestic Package; International Package; and Supply Chain & Freight. Its services include ground freight, ocean freight, air freight, customs brokerage, and insurance.

On Dec. 10, 2021, UPS Supply Chain Solutions (UPS SCS) opened its first innovation center globally–the UPS SCS Asia Pacific Innovation Centre in Singapore–to accelerate the digital transformation of businesses in Asia and connect them with emerging technologies in logistics. Because companies in the Asia Pacific region are pouring increasing investments into warehouse automation technologies to enhance productivity and competitiveness, UPS’ innovation center should witness surging demand going forward.

UPS’ non-GAAP total revenue increased 11.5% year-over-year to $27.77 billion in its fiscal 2021 fourth quarter, ended Dec. 31, 2021. The company’s non-GAAP total operating profit came in at $3.95 billion for the quarter, up 37.7% from the prior-year period. While its non-GAAP net income increased 35.6% year-over-year to $3.15 billion, its non-GAAP EPS increased 35% to $3.59.

Since the release of its earnings report on Feb. 1, 2022, the stock has gained 11.7% in price to close yesterday’s trading session at $225.07.

The $12.83 consensus EPS estimate for its fiscal year 2022, ended Dec. 31, 2022, represents a 5.8% rise from the prior-year period. It surpassed the consensus revenue estimates in each of the trailing four quarters. And analysts expect UPS’ revenue to rise 4.9% year-over-year to $102.02 billion. The company’s EPS is expected to grow at a 14% rate per annum over the next five years.

UPS’ 17.55x non-GAAP forward P/E is 8.4% greater than the 19.15x industry average. In terms of forward Price/Cash Flow, UPS is currently trading at 13.48x, which is 9.7% lower than the 14.93x industry average.

It is no surprise that UPS has an overall B rating, which equates to Buy in our POWR Ratings system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.

The stock has an A grade for Sentiment and a B grade for Stability and Quality. Click here to see the additional ratings for UPS’ Growth, Value, and Momentum. UPS is ranked #7 of 16 stocks in the A-rated Air Freight & Shipping Services industry.

MetLife, Inc. (MET)

MET is a New York City-based financial services company that provides insurance, annuities, employee benefits, and asset management services worldwide. The company offers personal property and casualty insurance, group insurance, pension products, accident and health products, regular savings products, whole and term life, endowments, and protection against long-term health care services.

On Jan. 28, 2022, MET’s Metropolitan Tower Life Insurance Company subsidiary completed $2.4 billion in longevity reinsurance transactions with Phoenix Group Holdings plc, one of the largest insurance services providers in the U.K. In the growing U.K. pension and longevity risk transfer market that has been resilient during the pandemic, MET’s financial strength and long history managing longevity risk should expand its presence and help Phoenix secure the retirement benefits of U.K. pensioners.

For its fiscal 2021 fourth quarter, ended Dec. 31, 2021, MET’s total revenues increased 3.5% year-over-year to $20.09 billion. The company’s pre-tax income came in at $1.31 billion, indicating a 696.3% increase over the prior-year period. Its adjusted earnings remained unchanged from the prior-year period at $1.84 billion for the quarter. However, MET’s adjusted EPS increased 6.9% year-over-year to $2.17.

Since the release of its earnings report on Feb. 2, 2022, the stock has gained 4.3% in price to close yesterday’s trading session at $70.42. MET surpassed the consensus EPS estimates in each of the trailing four quarters. The company’s EPS is expected to grow at a 5% rate per annum over the next five years.

In terms of forward non-GAAP P/E, MET is currently trading at 9.78x, which is 20.3% lower than the 12.27x industry average. In terms of forward Price/Cash Flow, MET is currently trading at 7.88x, which is 21% lower than the 9.97x industry average.

MET’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to Buy in our proprietary rating system. MET has a B grade for Value, Growth, Momentum, and Sentiment. Click here to see the additional ratings for MET’s Quality and Stability. MET is ranked #6 of 29 stocks in the B-rated Insurance – Life industry.

Capri Holdings Limited (CPRI)

Headquartered in London, CPRI designs, markets, distributes, and retails branded women’s and men’s apparel, footwear, eyewear and fragrance, and accessories internationally. The company operates through three business segments–Versace; Jimmy Choo; and Michael Koris. Its products are distributed through boutiques, retail stores, wholesale doors, department and specialty stores, and e-commerce sites and through vendors that have licensing agreements to manufacture and sell its products.

On Sept. 30, 2021, CPRI’s Versace brand extended its license agreement with EuroItalia, the Italy-based global fragrance and cosmetics company, for another 15 years. CPRI’s Michael Kors and EuroItalia will also enter a 15-year agreement to make EuroItalia the exclusive worldwide men’s and women’s fragrance licensee for the Michael Kors brand.

For its fiscal 2022 third quarter, ended Dec. 25, 2021, CPRI’s total revenue increased 23.6% year-over-year to $1.61 billion. The company’s gross profit came in at $1.05 billion, representing a 24.2% year-over-year improvement. Its adjusted operating income was $359 million, representing a 39.7% rise from the prior-year period. CPRI’s non-GAAP net income came in at $339 million for the quarter, up 35.6% from the prior-year period. Its non-GAAP EPS increased 34.6% year-over-year to $2.22. As of Dec. 25, 2021, the company had $261 million in cash and cash equivalents.

Since the release of its earnings report on Feb. 2, 2022, the stock has gained 14.4% and ended yesterday’s trading session at $69.96.

Analysts expect the company’s EPS to reach $6 for its fiscal year 2022, ending March 31, 2022, representing a 215.8% rise from the prior-year period. It surpassed the Street’s EPS estimates in each of the trailing four quarters. The $5.57 billion consensus revenue estimate for the same fiscal year indicates a 37.2% year-over-year improvement. The company’s EPS is expected to grow at a 54.5% rate per annum over the next five years.

CPRI’s 11.39x non-GAAP forward P/E is 19.2% lower than the 14.10x industry average. And in terms of forward Price/Cash Flow, CPRI is currently trading at 10.76x, which is 4.9% lower than the 11.32x industry average.

CPRI’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our proprietary rating system. It has an A grade for Quality and a B grade for Growth and Sentiment. Click here to see the additional ratings for CPRI (Value, Stability, and Momentum). CPRI is ranked #19 of 65 stocks in the A-rated Fashion & Luxury industry.

Ralph Lauren Corporation (RL)

RL designs, markets, and distributes lifestyle products, including apparel, accessories, home furnishings, fragrances, and hospitality internationally. The New York City company sells its products to mid-tier department stores, specialty stores, golf, and pro shops and directly to consumers through its retail stores, concession-based shops-within-shops, and digital commerce sites.

On Jan. 20, 2022, RL unveiled a groundbreaking apparel and textile innovation with Intelligent Insulation–a first-to-market, sustainably-minded temperature-responsive fabric that adapts to cooler temperatures by expanding and creating a layer of insulation. It was developed for Team USA for the Winter Games Opening Ceremonies. Partnering with textile innovation company Skyscrape, and designed with a sustainable ethos, Intelligent Insulation expands the lifespan and use. RL should witness higher demand in the coming months.

RL’s adjusted net revenues for its fiscal 2022 third quarter, ended Dec. 25, 2021, came in at $1.82 billion, representing a 26.7% rise from the prior-year period. The company’s adjusted gross profit was $1.20 billion, up 27.8% from the prior-year period. Its adjusted operating income came in at $289.20 million for the quarter, indicating a 52.3% year-over-year improvement. And RL’s adjusted net income came in at $218.10 million, representing a 74.9% rise from the year-ago period. Its adjusted EPS increased 76.1% year-over-year to $2.94. The company had $2.28 billion in cash and cash equivalents as of December 25, 2021.

Since the release of its earnings report on Feb. 3, 2022, the stock has gained 11.7% in price and ended yesterday’s trading session at $127.15.

Analysts expect RL’s EPS to improve 384.7% from the prior-year period to $8.24 for its fiscal 2022, ending March 31, 2022. It surpassed the Street EPS estimates in each of the trailing four quarters. The $6.16 billion consensus revenue estimate for the same fiscal year represents a 40.1% year-over-year improvement. The company’s EPS is expected to grow at an 80.2% rate per annum over the next five years.

RL’s 0.20x non-GAAP forward P/E is 79.5% lower than the 0.95x industry average. In terms of forward Price/Cash Flow, RL is currently trading at 11.42x, which is 1.7% lower than the 11.62x industry average.

RL’s POWR Ratings reflect its solid prospects. It has an overall rating of B, which equates to Buy in our proprietary rating system. The stock has an A grade for Quality and a B grade for Growth and Value.

In addition to the POWR Ratings grades we have just highlighted, one can see the ratings for RL’s Sentiment, Stability, and Momentum here. RL is ranked #10 in the A-rated Fashion & Luxury industry.

UPS shares were trading at $222.47 per share on Thursday afternoon, down $2.60 (-1.16%). Year-to-date, UPS has gained 3.79%, versus a -3.96% rise in the benchmark S&P 500 index during the same period.

About the Author: Sweta Vijayan

Sweta is an investment analyst and journalist with a special interest in finding market inefficiencies. She’s passionate about educating investors, so that they may find success in the stock market. More...

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