Value Investing unearths companies trading below the true value of the business. Current earning or book value may underestimate the realizable worth of the business if rationalized. Economies of scale refer to the idea of running increasing volumes through the same overhead structure, with a resulting benefit to operating margins and profitability.
Value can exist on the balance sheet.
For instance, a home builder who acquired land for future development at recession level prices. This land can be worth far more as economic activity increases, carrying land values with it. Home builders sell dirt, they just happen to have houses on them. That dirt may be valued well under market. Oil and mineral rights, timber rights, etc. acquired at the depths of economic slumps can have great value, as well.