Should Value Investors Buy These Industrial Products Stocks?
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...
While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.
Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.
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 company value investors might notice is Mitsui & Co. (MITSY). MITSY is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock is trading with P/E ratio of 6.88 right now. For comparison, its industry sports an average P/E of 8.97. MITSY's Forward P/E has been as high as 12.97 and as low as 5.03, with a median of 6.75, all within the past year.
Another valuation metric that we should highlight is MITSY's P/B ratio of 0.85. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. This stock's P/B looks solid versus its industry's average P/B of 2.42. Over the past year, MITSY's P/B has been as high as 0.89 and as low as 0.72, with a median of 0.82.
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. MITSY has a P/S ratio of 0.4. This compares to its industry's average P/S of 0.67.
Finally, our model also underscores that MITSY has a P/CF ratio of 5.42. 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. MITSY's current P/CF looks attractive when compared to its industry's average P/CF of 17.15. MITSY's P/CF has been as high as 7.49 and as low as 4.89, with a median of 6.01, all within the past year.
If you're looking for another solid Metal Products - Distribution value stock, take a look at Reliance Steel & Aluminum Co. (RS). RS is a # 2 (Buy) stock with a Value score of A.
Over the past year, RS's P/E has been as high as 16.57, as low as 9.35, with a median of 11.87; its PEG ratio has been as high as 1.84, as low as 1.21, with a median of 0.31 during the same time period.
Reliance Steel & Aluminum Co. sports a P/B ratio of 1.74 as well; this compares to its industry's price-to-book ratio of 2.42. In the past 52 weeks, RS's P/B has been as high as 2.11, as low as 1.44, with a median of 1.70.
These are just a handful of the figures considered in Mitsui & Co. and Reliance Steel & Aluminum Co.'s great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that MITSY and RS is an impressive value stock right now.
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Mitsui & Co. (MITSY): Free Stock Analysis Report
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