Are Investors Undervaluing Sasol (SSL) Right Now?
While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.
Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.
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.
One stock to keep an eye on is Sasol (SSL). SSL 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 3.75 right now. For comparison, its industry sports an average P/E of 8.18. Over the past 52 weeks, SSL's Forward P/E has been as high as 6.16 and as low as 3.71, with a median of 4.65.
SSL is also sporting a PEG ratio of 0.29. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. SSL's PEG compares to its industry's average PEG of 0.55. Over the last 12 months, SSL's PEG has been as high as 0.38 and as low as 0.24, with a median of 0.29.
Investors should also recognize that SSL has a P/B ratio of 0.80. 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. SSL's current P/B looks attractive when compared to its industry's average P/B of 1.61. SSL's P/B has been as high as 1.57 and as low as 0.74, with a median of 0.99, over the past year.
Value investors will likely look at more than just these metrics, but the above data helps show that Sasol is likely undervalued currently. And when considering the strength of its earnings outlook, SSL sticks out at as one of the market's strongest value stocks.
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