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Should Value Investors Buy AK Steel (AKS) Stock?

Zacks Equity Research

Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of 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.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

One company value investors might notice is AK Steel (AKS). AKS is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A.

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. AKS has a P/S ratio of 0.11. This compares to its industry's average P/S of 0.25.

Finally, investors will want to recognize that AKS has a P/CF ratio of 1.91. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 3.90. Within the past 12 months, AKS's P/CF has been as high as 4.67 and as low as 1.36, with a median of 1.96.

These are only a few of the key metrics included in AK Steel's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, AKS looks like an impressive value stock at the moment.


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