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Are Investors Undervaluing Ultra Clean Holdings (UCTT) Right Now?

·3 min read

The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find 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 to watch right now is Ultra Clean Holdings (UCTT). UCTT is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock has a Forward P/E ratio of 12.53. This compares to its industry's average Forward P/E of 21.07. Over the past 52 weeks, UCTT's Forward P/E has been as high as 20.15 and as low as 7.77, with a median of 12.93.

Investors should also note that UCTT holds a PEG ratio of 1.57. 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. UCTT's industry currently sports an average PEG of 2.63. Within the past year, UCTT's PEG has been as high as 2.52 and as low as 0.76, with a median of 1.56.

Investors should also recognize that UCTT has a P/B ratio of 3.41. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. UCTT's current P/B looks attractive when compared to its industry's average P/B of 5.37. Over the past 12 months, UCTT's P/B has been as high as 4.58 and as low as 1.46, with a median of 2.25.

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. UCTT has a P/S ratio of 1.31. This compares to its industry's average P/S of 2.66.

Finally, our model also underscores that UCTT has a P/CF ratio of 14.36. 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. UCTT's P/CF compares to its industry's average P/CF of 26.44. UCTT's P/CF has been as high as 23.58 and as low as 9.62, with a median of 15.06, all within the past year.

These are just a handful of the figures considered in Ultra Clean Holdings'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 UCTT is an impressive value stock right now.


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