Are these stocks too cheap to ignore after today’s results?

These three firms have released solid results today. But which of them is the best buy?

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Today’s results include figures from three companies with the potential to deliver big gains for shareholders. I’ve taken a closer look.

Housing boom still on?

Shares in housebuilder Persimmon (LSE: PSN) rose by 5% this morning, after the firm said sales since 1 July have been 17% higher than during the same period last year.

Fears of a post-referendum slump have so far proved unfounded. Persimmon’s shares have rebounded and are now only 10% lower than they were before the referendum. The group’s operating margin rose by 3.2% to 23.8% during the first half, while completions rose by 6% to 7,238 homes. Pre-tax profits were 29% higher, at £352.3m.

Persimmon’s £2.76bn capital returns plan remains unchanged. The company paid out 110p per share in April, and expects to make the next 110p payment in July 2017.

Persimmon shares trade on 10 times forecast earnings and offer a 5.9% forecast yield. However, profits are expected to fall by around 10% next year, pushing the forecast P/E multiple towards 11.

In my view, the current valuation is about right. I’d hold.

A confident outlook

Bingo hall and casino operator Rank Group (LSE: RNK) said this morning that adjusted pre-tax profit rose by 4% to £77.4m last year, lifting adjusted earnings per share by 5% to 15.4p.

The final dividend for last year will be 4.7p, an 18% increase on the previous year. This takes the group’s total payout up by 16% to 6.5p, giving a yield of 2.9%.

Rank’s bricks and mortar bingo and casino operations may seem dated to many investors, but they seem to generate plenty of cash. The company had to make a £21.7m tax payment last year in relation to a disputed tax planning scheme. Despite this, net debt fell by 22% to just £41.2m, and the group generated enough free cash flow to cover the dividend 1.6 times.

The company is now focusing on digital growth as it moves on from its failed attempt to combine with 888 Holdings and William Hill. The shares currently trade on 13.5 times forecast earnings and offer a 3.2% forecast yield. I believe this could be a decent level for new and existing shareholders to buy.

Is this 7% yield a buy?

Industrial services firm Cape (LSE: CIU) saw adjusted pre-tax profits fall by 30% to £14.9m during the first half of the year. Although revenues for the period were 10% higher at £396.3m, lower margins pushed profits down.

Cape expects trading to improve during the second half of the year. The firm says that full-year expectations remain unchanged. This puts the stock on a forecast P/E of 7.5. The expected dividend of 14p per share means that Cape offers a prospective yield of 7.7%.

These shares ought to be cheap, but I’m not sure. New claims relating to historic asbestos activity mean that the group has decided to make an additional £9m payment into its claims fund this year. Net debt of £113.7m also remains stubbornly high, relative to forecast profits of £27.9m.

Cape’s profits are expected to fall by 10% this year, and be flat in 2017. It may still be too soon to buy.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Roland Head has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

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