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Is Covenant Transportation (CVTI) Stock Undervalued Right Now?

Zacks Equity Research
PEBO vs. FIBK: Which Stock Is the Better Value Option?

Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

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 to watch right now is Covenant Transportation (CVTI). CVTI is currently sporting a Zacks Rank of #1 (Strong Buy) and an A for Value. The stock is trading with a P/E ratio of 12.58, which compares to its industry's average of 17.06. Over the past year, CVTI's Forward P/E has been as high as 31.88 and as low as 12.30, with a median of 17.98.

Another valuation metric that we should highlight is CVTI's P/B ratio of 1.83. Investors use the P/B ratio to look at a stock's market value versus 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 2.72. Within the past 52 weeks, CVTI's P/B has been as high as 2.24 and as low as 1.46, with a median of 1.86.

Finally, our model also underscores that CVTI has a P/CF ratio of 3.94. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 10.51. CVTI's P/CF has been as high as 6.39 and as low as 3.66, with a median of 4.31, all within the past year.

These figures are just a handful of the metrics value investors tend to look at, but they help show that Covenant Transportation is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, CVTI feels like a great value stock at the moment.


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