Is Imperial Tobacco Group (IMBBY) Stock Undervalued Right Now?

Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

One stock to keep an eye on is Imperial Tobacco Group (IMBBY). IMBBY is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock has a Forward P/E ratio of 6.38. This compares to its industry's average Forward P/E of 10.77. Over the past 52 weeks, IMBBY's Forward P/E has been as high as 7.23 and as low as 5.69, with a median of 6.35.

Investors should also note that IMBBY holds a PEG ratio of 0.78. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. IMBBY's PEG compares to its industry's average PEG of 1.62. IMBBY's PEG has been as high as 0.86 and as low as 0.78, with a median of 0.83, all within the past year.

Another great Tobacco stock you could consider is Turning Point Brands (TPB), which is a # 2 (Buy) stock with a Value Score of A.

Additionally, Turning Point Brands has a P/B ratio of 3.71 while its industry's price-to-book ratio sits at -22.79. For TPB, this valuation metric has been as high as 7.55, as low as 3.64, with a median of 4.95 over the past year.

Value investors will likely look at more than just these metrics, but the above data helps show that Imperial Tobacco Group and Turning Point Brands are likely undervalued currently. And when considering the strength of its earnings outlook, IMBBY and TPB sticks out as one of the market's strongest value stocks.

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