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Is Asahi Kasei (AHKSY) Stock Undervalued 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...

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This story originally appeared on Zacks

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.

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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 fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

One stock to keep an eye on is Asahi Kasei (AHKSY). AHKSY is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock is trading with a P/E ratio of 10.80, which compares to its industry's average of 12.21. Over the past 52 weeks, AHKSY's Forward P/E has been as high as 17.82 and as low as 10.73, with a median of 13.

Another valuation metric that we should highlight is AHKSY's P/B ratio of 0.91. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. This stock's P/B looks attractive against its industry's average P/B of 2.45. AHKSY's P/B has been as high as 1.28 and as low as 0.91, with a median of 1.10, 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. AHKSY has a P/S ratio of 0.62. This compares to its industry's average P/S of 0.91.

Finally, investors will want to recognize that AHKSY has a P/CF ratio of 5.34. 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 company's current P/CF looks solid when compared to its industry's average P/CF of 11.05. Within the past 12 months, AHKSY's P/CF has been as high as 8.69 and as low as 5.31, with a median of 7.28.

These figures are just a handful of the metrics value investors tend to look at, but they help show that Asahi Kasei is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, AHKSY feels like a great value stock at the moment.



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