7 Low EV/EBITDA Stocks With Strong ROIC

Value-focused investors often rely on the EV/EBITDA ratio to identify companies that may be undervalued relative to their earnings power. A low EV/EBITDA ratio can indicate that the market is pricing a company below its operational potential, especially when the business is generating solid cash flow and maintaining healthy margins.

However, valuation alone does not guarantee quality. That is why pairing a low EV/EBITDA with a strong return on invested capital can be a powerful screen. ROIC measures how efficiently a company is deploying its capital to generate returns, which helps distinguish genuine value opportunities from value traps.

When a company combines a low EV/EBITDA multiple with a high ROIC, it suggests that the business is both attractively priced and operating efficiently. These companies are often in a position to generate sustainable long-term returns while still trading at discounted valuations.

The following stocks stand out for offering this rare combination of low EV/EBITDA and strong ROIC, making them compelling picks for investors looking for both value and quality in today’s market.

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ConocoPhillips (COP)

ConocoPhillips is a major independent exploration and production company focused on oil and natural gas across regions such as the United States, Canada, and the Middle East. The company’s revenue has been volatile, with a significant decline in 2023 and 2024 after a surge in 2022 due to a high-price environment.

Its trailing return on equity is around 14.98%, while the stock currently trades at a price-to-earnings ratio of roughly 16. ConocoPhillips offers a dividend yield of approximately 3.27% and has a strong shareholder return program that includes both a regular quarterly dividend and a variable dividend, supported by healthy free cash flow.

With a disciplined capital strategy and exposure to some of the most attractive shale basins, ConocoPhillips remains a solid energy stock for investors seeking a combination of income and exposure to long-term energy demand.

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FedEx (FDX)

FedEx is a global logistics and transportation company that provides express delivery, ground shipping, freight services, and supply chain solutions worldwide. The company has recently faced a period of moderate growth, with revenue increasing by just 0.27% in its last fiscal year due to macroeconomic headwinds.

Its return on equity is around 15.1%, and the stock trades at a price-to-earnings ratio of about 12, which is below the broader industrial sector average. FedEx offers a dividend yield of roughly 2.55% and has increased its dividend for over 20 consecutive years.

While shipping volumes can fluctuate based on economic conditions, FedEx’s global network scale, continued cost optimization, and expansion into logistics services position it as a well-rounded investment in the transportation sector.

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Exxon Mobil (XOM)

Exxon Mobil is one of the world’s largest integrated oil and gas companies with operations spanning exploration, production, refining, and chemical manufacturing. The company’s revenue has been volatile, recently experiencing a decline of 2.9% on a trailing twelve-month basis, reflecting changes in commodity prices.

Despite this, Exxon maintains a strong return on equity of about 15.15%. The stock trades at a price-to-earnings ratio near 15.18, and it offers a dividend yield of approximately 3.72%. The company has a remarkable track record of 43 consecutive years of dividend increases, supported by strong cash flow and a disciplined capital spending strategy.

Exxon’s focus on both traditional hydrocarbons and low-carbon initiatives such as carbon capture technology provides investors with a mix of stability and future growth potential in the global energy landscape.

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Wall Street Analysts Are Bullish on These 5 Undervalued Compounders With Market-Beating Potential

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• Strong revenue growth and durable competitive advantages
• Attractive valuations based on forward earnings and expected earnings growth
• Long-term upside potential backed by analyst forecasts and TIKR’s valuation models

These are the kinds of stocks that can deliver massive long-term returns, especially if you catch them while they’re still trading at a discount.

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Disclaimer:

Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!