Is Century Aluminum (CENX) Stock Undervalued Right Now?
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.
Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. 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.
One company value investors might notice is Century Aluminum (CENX). CENX is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock holds a P/E ratio of 6.48, while its industry has an average P/E of 10.59. Over the past 52 weeks, CENX's Forward P/E has been as high as 25.18 and as low as 1.87, with a median of 3.43.
Investors should also recognize that CENX has a P/B ratio of 1.77. 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 attractive against its industry's average P/B of 4.71. Over the past year, CENX's P/B has been as high as 6.31 and as low as 0.93, with a median of 1.67.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's 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. CENX has a P/S ratio of 0.33. This compares to its industry's average P/S of 0.73.
Finally, we should also recognize that CENX has a P/CF ratio of 4.10. 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. CENX's P/CF compares to its industry's average P/CF of 6.73. Over the past 52 weeks, CENX's P/CF has been as high as 37.31 and as low as -33.75, with a median of 4.08.
Investors could also keep in mind Worthington Industries (WOR), an Metal Products - Procurement and Fabrication stock with a Zacks Rank of # 2 (Buy) and Value grade of A.
Worthington Industries also has a P/B ratio of 1.67 compared to its industry's price-to-book ratio of 4.71. Over the past year, its P/B ratio has been as high as 1.97, as low as 1.15, with a median of 1.57.
Value investors will likely look at more than just these metrics, but the above data helps show that Century Aluminum and Worthington Industries are likely undervalued currently. And when considering the strength of its earnings outlook, CENX and WOR sticks out as one of the market's strongest value stocks.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Century Aluminum Company (CENX) : Free Stock Analysis Report
Worthington Industries, Inc. (WOR) : Free Stock Analysis Report
To read this article on Zacks.com click here.