Is Anhui Conch Cement a Good Value Pick at the Moment?

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 Anhui Conch Cement Company Limited AHCHY 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:

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, Anhui Conch Cementhas a trailing twelve months PE ratio of 10.28, as you can see in the chart below:

This level actually compares pretty favorably with the market at large as well, as the PE for the S&P 500 stands at about 19.89. If we focus on the PE trend, Anhui Conch Cement’s current PE level is slightly below its midpoint over the past four years (which stands at 10.75). Meanwhile, it is to be noted that the current level is fairly below the highs for this stock, suggesting that the stock is undervalued compared to its historical levels.

Further, the stock’s PE also compares favorably with the Zacks classified Building-Cement/Concrete/Aggregates industry’s trailing twelve months PE ratio, which stands at 29.50. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.

We should also point out that Anhui Conch Cementhas a forward PE ratio (price relative to this year’s earnings) of 10.41 which is roughly in line with the current level. Hence the forward earnings estimates are already incorporated in the company’s current share price.

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, Anhui Conch Cementhas a P/S ratio of about 1.84. This is way lower than the S&P 500 average, which comes in at 2.97 right now. Also, as we can see in the chart below, this is below the highs for this stock in particular over the past four years.

If anything, AHCHY is in the lower end of its range in the time period from a P/S metric, suggesting some level of undervalued trading—at least compared to historical norms.

Broad Value Outlook

In aggregate, Anhui Conch Cementcurrently has a Zacks Value Style Score of ‘A’, putting it into the top 20% of all stocks we cover from this look. This makes Anhui Conch Cementa solid choice for value investors, and some of its other key metrics make this pretty clear too.

For example, its P/CF ratio (another great indicator of value) comes in at 3.30, which is far better than the industry average of 12.98. Clearly, Anhui Conch Cementis a solid choice on the value front from multiple angles.

What About the Stock Overall?

Though Anhui Conch Cementmight 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 grade of ‘C’ and a Momentum score of ‘A’. This gives AHCHY 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 current year’s earnings estimates have remained stable, while that for the next year have been trending higher.

The next year has seen one estimate go higher in the past sixty days compared to none lower. As a result, the consensus estimate for the next year has improved to $1.50 from $1.38 over the last 60 days. You can see the consensus estimate trend and recent price action for the stock in the chart below:

Anhui Conch Cement Co. Price and Consensus

Anhui Conch Cement Co. Price and Consensus | Anhui Conch Cement Co. Quote

This bullish trend might be why the stock has a Zacks Rank #1 (Strong Buy) and why we are expecting outperformance from the company in the near term.

Bottom Line

Anhui Conch Cementis an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Boasting a good industry rank (Top 20% out of more than 250 industries) and a top Zacks Rank, the company deserves attention right now.

So, 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.

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