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Is Kemet (KEM) a Great Value Stock Right Now?

Zacks Equity Research

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.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

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 stock to keep an eye on is Kemet (KEM). KEM is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A.

We should also highlight that KEM has a P/B ratio of 2.05. 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. This company's current P/B looks solid when compared to its industry's average P/B of 2.54. Over the past year, KEM's P/B has been as high as 3.62 and as low as 1.78, with a median of 2.34.

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. KEM has a P/S ratio of 0.8. This compares to its industry's average P/S of 1.44.

Finally, investors will want to recognize that KEM has a P/CF ratio of 6.48. 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. This stock's P/CF looks attractive against its industry's average P/CF of 10.53. Within the past 12 months, KEM's P/CF has been as high as 14.66 and as low as 2.84, with a median of 6.72.

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


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