Are Investors Undervaluing Strattec Security (STRT) 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, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.
One company value investors might notice is Strattec Security (STRT). STRT is currently sporting a Zacks Rank of #1 (Strong Buy) and an A for Value. The stock is trading with a P/E ratio of 9.60, which compares to its industry's average of 15.86. Over the past 52 weeks, STRT's Forward P/E has been as high as 18.24 and as low as 4.41, with a median of 9.94.
Investors will also notice that STRT has a PEG ratio of 0.64. 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. STRT's industry has an average PEG of 1.35 right now. STRT's PEG has been as high as 1.22 and as low as 0.29, with a median of 0.66, all within the past year.
Investors should also recognize that STRT has a P/B ratio of 1.04. 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 2.41. STRT's P/B has been as high as 1.09 and as low as 0.24, with a median of 0.45, over the past year.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by 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. STRT has a P/S ratio of 0.46. This compares to its industry's average P/S of 0.65.
Value investors will likely look at more than just these metrics, but the above data helps show that Strattec Security is likely undervalued currently. And when considering the strength of its earnings outlook, STRT sticks out at as one of the market's strongest value stocks.
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