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Are Investors Undervaluing Methanex (MEOH) Right Now?

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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.

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.

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.

Methanex (MEOH) is a stock many investors are watching right now. MEOH is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock is trading with P/E ratio of 8.61 right now. For comparison, its industry sports an average P/E of 12.56. Over the last 12 months, MEOH's Forward P/E has been as high as 45.35 and as low as 7.65, with a median of 13.09.

Investors should also recognize that MEOH has a P/B ratio of 1.76. The P/B is a method of comparing a stock's market value to 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 2.52. Over the past 12 months, MEOH's P/B has been as high as 2.54 and as low as 1.34, with a median of 1.81.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. MEOH has a P/S ratio of 0.81. This compares to its industry's average P/S of 0.93.

Finally, investors will want to recognize that MEOH has a P/CF ratio of 5.36. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 11.36. Over the past year, MEOH's P/CF has been as high as 18.25 and as low as 4.77, with a median of 8.89.

These are just a handful of the figures considered in Methanex's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that MEOH is an impressive value stock right now.


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