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Are Investors Undervaluing Adient (ADNT) Right Now?

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Zacks Equity Research
·2 min read
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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.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

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 Adient (ADNT). ADNT is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value.

Investors should also recognize that ADNT has a P/B ratio of 1.96. 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. ADNT's current P/B looks attractive when compared to its industry's average P/B of 2.41. Over the past year, ADNT's P/B has been as high as 2.28 and as low as 0.29, with a median of 1.07.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. ADNT has a P/S ratio of 0.28. This compares to its industry's average P/S of 0.77.

These are only a few of the key metrics included in Adient'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, ADNT looks like an impressive value stock at the moment.


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