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Are Investors Undervaluing Cosan (CZZ) 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, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

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 stock to keep an eye on is Cosan (CZZ). CZZ is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock holds a P/E ratio of 14.57, while its industry has an average P/E of 15.89. Over the past 52 weeks, CZZ's Forward P/E has been as high as 19.16 and as low as 9.64, with a median of 13.90.

Another notable valuation metric for CZZ is its P/B ratio of 0.89. 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 solid versus its industry's average P/B of 1.31. Within the past 52 weeks, CZZ's P/B has been as high as 0.92 and as low as 0.42, with a median of 0.67.

Finally, our model also underscores that CZZ has a P/CF ratio of 3.88. 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. CZZ's current P/CF looks attractive when compared to its industry's average P/CF of 6.19. CZZ's P/CF has been as high as 4.01 and as low as 2.38, with a median of 3.20, all within the past year.

Value investors will likely look at more than just these metrics, but the above data helps show that Cosan is likely undervalued currently. And when considering the strength of its earnings outlook, CZZ sticks out at as one of the market's strongest value stocks.

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