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Are Investors Undervaluing Textainer Group (TGH) Right Now?

Zacks Equity Research

Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

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 Textainer Group (TGH). TGH is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock is trading with a P/E ratio of 6.25, which compares to its industry's average of 11.12. Over the past year, TGH's Forward P/E has been as high as 10.49 and as low as 6.07, with a median of 7.73.

Investors should also recognize that TGH has a P/B ratio of 0.43. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. TGH's current P/B looks attractive when compared to its industry's average P/B of 1.12. Over the past year, TGH's P/B has been as high as 0.74 and as low as 0.42, with a median of 0.51.

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. TGH has a P/S ratio of 0.94. This compares to its industry's average P/S of 1.04.

Finally, investors should note that TGH has a P/CF ratio of 1.82. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. TGH's current P/CF looks attractive when compared to its industry's average P/CF of 6.05. Within the past 12 months, TGH's P/CF has been as high as 2.98 and as low as 1.77, with a median of 2.13.

Value investors will likely look at more than just these metrics, but the above data helps show that Textainer Group is likely undervalued currently. And when considering the strength of its earnings outlook, TGH sticks out at as one of the market's strongest value stocks.


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