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Is Atlantic Power (AT) Stock Undervalued Right Now?

Zacks Equity Research
Wall Street finished in the green reversing its five-day negative trend on Thursday following news that United States and China have ramped up their efforts to resolve lingering trade disputes

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, 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 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.

Atlantic Power (AT) is a stock many investors are watching right now. AT is currently sporting a Zacks Rank of #1 (Strong Buy), as well as an A grade for Value.

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. AT has a P/S ratio of 0.76. This compares to its industry's average P/S of 1.83.

Finally, investors should note that AT has a P/CF ratio of 3.43. 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. AT's current P/CF looks attractive when compared to its industry's average P/CF of 8.51. Over the past year, AT's P/CF has been as high as 9.54 and as low as 2.48, with a median of 4.75.

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


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