Are Investors Undervaluing Ternium (TX) 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.
Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.
One company to watch right now is Ternium (TX). TX is currently sporting a Zacks Rank of #1 (Strong Buy), as well as a Value grade of A. The stock is trading with P/E ratio of 3.33 right now. For comparison, its industry sports an average P/E of 3.79. Over the past 52 weeks, TX's Forward P/E has been as high as 5.97 and as low as 2.32, with a median of 3.98.
TX is also sporting a PEG ratio of 0.22. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. TX's PEG compares to its industry's average PEG of 0.29. Over the last 12 months, TX's PEG has been as high as 0.30 and as low as 0.13, with a median of 0.20.
Another notable valuation metric for TX is its P/B ratio of 0.54. 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. TX's current P/B looks attractive when compared to its industry's average P/B of 0.79. Over the past 12 months, TX's P/B has been as high as 1.13 and as low as 0.52, with a median of 0.73.
Finally, investors should note that TX has a P/CF ratio of 1.52. 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. TX's P/CF compares to its industry's average P/CF of 2.32. Over the past 52 weeks, TX's P/CF has been as high as 3.70 and as low as 1.46, with a median of 1.97.
Investors could also keep in mind United States Steel (X), an Steel - Producers stock with a Zacks Rank of # 1 (Strong Buy) and Value grade of A.
United States Steel is trading at a forward earnings multiple of 2.63 at the moment, with a PEG ratio of 0.47. This compares to its industry's average P/E of 3.79 and average PEG ratio of 0.29.
Over the past year, X's P/E has been as high as 4.88, as low as 1.60, with a median of 3.29; its PEG ratio has been as high as 0.48, as low as 0.42, with a median of 0.20 during the same time period.
Furthermore, United States Steel holds a P/B ratio of 0.48 and its industry's price-to-book ratio is 0.79. X's P/B has been as high as 1.34, as low as 0.45, with a median of 0.80 over the past 12 months.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Ternium and United States Steel are likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, TX and X feels like a great value stock at the moment.
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