Yahoo Finance Should Value Investors Buy Amerigo Resources (ARREF) Stock?
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.
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 use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
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 Amerigo Resources (ARREF). ARREF is currently sporting a Zacks Rank of #1 (Strong Buy) and an A for Value. The stock has a Forward P/E ratio of 6.81. This compares to its industry's average Forward P/E of 17.15. ARREF's Forward P/E has been as high as 31.49 and as low as 4.85, with a median of 7.08, all within the past year.
Another valuation metric that we should highlight is ARREF's P/B ratio of 1.48. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. This company's current P/B looks solid when compared to its industry's average P/B of 2.38. ARREF's P/B has been as high as 1.89 and as low as 0.82, with a median of 1.30, over the past year.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. ARREF has a P/S ratio of 1.08. This compares to its industry's average P/S of 2.21.
Finally, investors should note that ARREF has a P/CF ratio of 10.41. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 12.36. Over the past year, ARREF's P/CF has been as high as 13.33 and as low as 2.35, with a median of 4.45.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Amerigo Resources is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, ARREF feels like a great value stock at the moment.
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Amerigo Resources Ltd. (ARREF) : Free Stock Analysis Report
