Are Investors Undervaluing Celestica (CLS) 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 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.
Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. 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 company value investors might notice is Celestica (CLS). CLS is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock has a Forward P/E ratio of 6.81. This compares to its industry's average Forward P/E of 10.23. Over the last 12 months, CLS's Forward P/E has been as high as 9.54 and as low as 6.15, with a median of 7.93.
Investors should also note that CLS holds a PEG ratio of 0.67. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. CLS's PEG compares to its industry's average PEG of 0.90. Over the last 12 months, CLS's PEG has been as high as 2.11 and as low as 0.24, with a median of 0.74.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. CLS has a P/S ratio of 0.24. This compares to its industry's average P/S of 0.36.
Finally, investors will want to recognize that CLS has a P/CF ratio of 5.75. 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. CLS's P/CF compares to its industry's average P/CF of 7.83. Over the past 52 weeks, CLS's P/CF has been as high as 6.65 and as low as 4.30, with a median of 5.56.
Value investors will likely look at more than just these metrics, but the above data helps show that Celestica is likely undervalued currently. And when considering the strength of its earnings outlook, CLS sticks out at as one of the market's strongest value stocks.
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