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Are Investors Undervaluing AZZ (AZZ) Right Now?

Zacks Equity Research

Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore 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 rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

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.

AZZ (AZZ) is a stock many investors are watching right now. AZZ is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A.

Another notable valuation metric for AZZ is its P/B ratio of 1.90. The P/B ratio is used to compare a stock's market value with 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 3.81. Over the past 12 months, AZZ's P/B has been as high as 2.51 and as low as 1.65, with a median of 2.02.

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. AZZ has a P/S ratio of 1.22. This compares to its industry's average P/S of 1.55.

Finally, our model also underscores that AZZ has a P/CF ratio of 11.28. 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. AZZ's current P/CF looks attractive when compared to its industry's average P/CF of 18.05. AZZ's P/CF has been as high as 14.37 and as low as 8.41, with a median of 11.63, all within the past year.

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


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