Are Investors Undervaluing Arkema (ARKAY) Right Now?
The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.
Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
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 company value investors might notice is Arkema (ARKAY). ARKAY 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 10.81. This compares to its industry's average Forward P/E of 12.77. Over the past year, ARKAY's Forward P/E has been as high as 12.27 and as low as 5.66, with a median of 8.87.
Another valuation metric that we should highlight is ARKAY's P/B ratio of 0.95. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. ARKAY's current P/B looks attractive when compared to its industry's average P/B of 1.86. Over the past year, ARKAY's P/B has been as high as 1.35 and as low as 0.65, with a median of 0.90.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. ARKAY has a P/S ratio of 0.61. This compares to its industry's average P/S of 0.72.
Finally, investors will want to recognize that ARKAY has a P/CF ratio of 4.05. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 6.39. Within the past 12 months, ARKAY's P/CF has been as high as 4.31 and as low as 2.50, with a median of 3.41.
These are just a handful of the figures considered in Arkema's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that ARKAY is an impressive value stock right now.
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