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Should Value Investors Pick Pangaea Logistics Stock Now?

Is Pangaea Logistics (PANL) a great pick from the value investor's perspective right now? Read on to know more.

This story originally appeared on Zacks

Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?

One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Pangaea Logistics Solutions Ltd. PANL stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:

- Zacks

PE Ratio

A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.

On this front, Pangaea Logistics has a trailing twelve months PE ratio of 7.9, as you can see in the chart below:

Zacks Investment Research

Image Source: Zacks Investment Research

This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 stands at about 25.3. If we focus on the long-term PE trend, Pangaea Logistics’ current PE level puts it marginally above its midpoint over the past five years.

Zacks Investment Research

Image Source: Zacks Investment Research

Further, the stock’s PE also compares favorably with its sector’s trailing twelve months PE ratio, which stands at 163.9. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.

Zacks Investment Research

Image Source: Zacks Investment Research

We should also point out that Pangaea Logistics has a forward PE ratio (price relative to this year’s earnings) of just 4.9, so it is fair to say that a slightly more value-oriented path may be ahead for Pangaea Logistics stock in the near term too.

P/S Ratio

Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.

Right now, Pangaea Logistics has a P/S ratio of about 0.5. This is a lower than the S&P 500 average, which comes in at 5.1 right now. However, we can see in the chart below, this is slightly above the highs for this stock in particular over the past few years.

Zacks Investment Research

Image Source: Zacks Investment Research

If anything, this suggests some level of undervalued trading—at least compared to historical norms.

Broad Value Outlook

In aggregate, Pangaea Logistics currently has a Value Score of A, putting it into the top 20% of all stocks we cover from this look. This makes Pangaea Logistics a solid choice for value investors.

What About the Stock Overall?

Though Pangaea Logistics might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth Score of C and a Momentum Score of A. This gives PANL a Zacks VGM score — or its overarching fundamental grade — of A. (You can read more about the Zacks Style Scores here >>).

Meanwhile, the company’s recent earnings estimates have been robust at best. The current quarter and the full year has seen one estimate go higher in the past sixty days, each.

This has had a noticeable impact on the consensus estimate though as the current quarter consensus estimate has increased by 25% in the past two months, while the full year estimate has improved by 55.7%. You can see the consensus estimate trend and recent price action for the stock in the chart below:

This bullish trend is why the stock has a Zacks Rank #2 (Buy) and why we are expecting outperformance from the company in the near term.

Bottom Line

Pangaea Logistics is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front.  Boasting a solid industry rank (top 31%) and a top Zacks Rank, the company deserves attention right now. However, over the past two years, the sector has underperformed the broader market, as you can see below:

Zacks Investment Research

Image Source: Zacks Investment Research

Nonetheless, it might pay for value investors to delve deeper into the company’s prospects, as fundamentals indicate that this stock could be a compelling pick.

Tech IPOs With Massive Profit Potential

In the past few years, many popular platforms and like Uber and Airbnb finally made their way to the public markets. But the biggest paydays came from lesser-known names.

For example, electric carmaker X Peng shot up +299.4% in just 2 months. Think of it this way…

If you had put $5,000 into XPEV at its IPO in September 2020, you could have cashed out with $19,970 in November.

With record amounts of cash flooding into IPOs and a record-setting stock market, this year’s lineup could be even more lucrative.

See Zacks Hottest Tech IPOs Now >>

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Pangaea Logistics Solutions Ltd. (PANL): Free Stock Analysis Report


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