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Is CCA (CXW) Stock Undervalued Right Now?

Zacks Equity Research
In the latest trading session, Electronic Arts (EA) closed at $87.50, marking a -1.89% move from the previous day.

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 tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.

CCA (CXW) is a stock many investors are watching right now. CXW is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock has a Forward P/E ratio of 7.83. This compares to its industry's average Forward P/E of 14.95. Over the past year, CXW's Forward P/E has been as high as 11.35 and as low as 7.28, with a median of 9.60.

Investors will also notice that CXW has a PEG ratio of 1.21. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. CXW's industry currently sports an average PEG of 2.67. CXW's PEG has been as high as 1.89 and as low as 1.21, with a median of 1.61, all within the past year.

We should also highlight that CXW has a P/B ratio of 1.59. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. CXW's current P/B looks attractive when compared to its industry's average P/B of 2.25. CXW's P/B has been as high as 2.15 and as low as 1.45, with a median of 1.81, over the past year.

Finally, investors should note that CXW has a P/CF ratio of 7.14. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 15.29. CXW's P/CF has been as high as 9.82 and as low as 6.53, with a median of 8.07, all within the past year.

These are only a few of the key metrics included in CCA's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, CXW looks like an impressive value stock at the moment.

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