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Are Investors Undervaluing Teekay Tankers (TNK) Right Now?

Zacks Equity Research
·3 min read

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.

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.

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 Teekay Tankers (TNK). TNK is currently sporting a Zacks Rank of #2 (Buy) and an A for Value.

We should also highlight that TNK has a P/B ratio of 0.56. 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. TNK's current P/B looks attractive when compared to its industry's average P/B of 0.86. TNK's P/B has been as high as 0.88 and as low as 0.28, with a median of 0.56, over the past year.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. TNK has a P/S ratio of 0.55. This compares to its industry's average P/S of 0.62.

Finally, we should also recognize that TNK has a P/CF ratio of 2.16. 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. TNK's P/CF compares to its industry's average P/CF of 7.95. Over the past year, TNK's P/CF has been as high as 7.28 and as low as 2.05, with a median of 3.16.

These are just a handful of the figures considered in Teekay Tankers'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 TNK is an impressive value stock right now.

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Zacks Investment Research