Are Investors Undervaluing CNX Midstream (CNXM) Right Now?
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.
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 value investors might notice is CNX Midstream (CNXM). CNXM is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock is trading with P/E ratio of 7.40 right now. For comparison, its industry sports an average P/E of 12.36. Over the past year, CNXM's Forward P/E has been as high as 9.51 and as low as 6.05, with a median of 7.37.
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. CNXM has a P/S ratio of 3.29. This compares to its industry's average P/S of 3.3.
Finally, investors will want to recognize that CNXM has a P/CF ratio of 5.38. 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 6.75. Within the past 12 months, CNXM's P/CF has been as high as 9.74 and as low as 4.86, with a median of 6.52.
Value investors will likely look at more than just these metrics, but the above data helps show that CNX Midstream is likely undervalued currently. And when considering the strength of its earnings outlook, CNXM sticks out at as one of the market's strongest value stocks.
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