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Is Adecoagro (AGRO) Stock Undervalued Right Now?

Zacks Equity Research

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 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 Adecoagro (AGRO). AGRO 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 10.45. This compares to its industry's average Forward P/E of 13.93. AGRO's Forward P/E has been as high as 22.06 and as low as 8.95, with a median of 11.43, all within the past year.

Another notable valuation metric for AGRO is its P/B ratio of 0.62. The P/B is a method of comparing a stock's market value to 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 0.73. Within the past 52 weeks, AGRO's P/B has been as high as 2.01 and as low as 0.60, with a median of 0.75.

Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. AGRO has a P/S ratio of 0.9. This compares to its industry's average P/S of 1.41.

Finally, investors will want to recognize that AGRO has a P/CF ratio of 3.72. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 9.65. Over the past 52 weeks, AGRO's P/CF has been as high as 6.86 and as low as 3.59, with a median of 5.83.

Value investors will likely look at more than just these metrics, but the above data helps show that Adecoagro is likely undervalued currently. And when considering the strength of its earnings outlook, AGRO sticks out at as one of the market's strongest value stocks.


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