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Is Posco (PKX) Stock Undervalued Right Now?

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·3 min read
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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, 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 stock to keep an eye on is Posco (PKX). PKX is currently sporting a Zacks Rank of #1 (Strong Buy), as well as an A grade for Value.

PKX is also sporting a PEG ratio of 1.93. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. PKX's industry has an average PEG of 3.56 right now. Over the past 52 weeks, PKX's PEG has been as high as 2.15 and as low as 1.39, with a median of 1.77.

We should also highlight that PKX has a P/B ratio of 0.65. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. PKX's current P/B looks attractive when compared to its industry's average P/B of 0.91. Within the past 52 weeks, PKX's P/B has been as high as 0.66 and as low as 0.28, with a median of 0.39.

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. PKX has a P/S ratio of 0.52. This compares to its industry's average P/S of 0.63.

These are just a handful of the figures considered in Posco'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 PKX is an impressive value stock right now.


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