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Is Quanta Services (PWR) Stock Undervalued Right Now?

Zacks Equity Research

Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

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 use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

One company to watch right now is Quanta Services (PWR). PWR is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock has a Forward P/E ratio of 10.11. This compares to its industry's average Forward P/E of 12.65. PWR's Forward P/E has been as high as 12.51 and as low as 8.48, with a median of 10.68, all within the past year.

Another notable valuation metric for PWR is its P/B ratio of 1.42. 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. This stock's P/B looks attractive against its industry's average P/B of 1.63. Over the past 12 months, PWR's P/B has been as high as 1.57 and as low as 1.09, with a median of 1.38.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. PWR has a P/S ratio of 0.46. This compares to its industry's average P/S of 0.63.

Finally, our model also underscores that PWR has a P/CF ratio of 8.65. 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. PWR's current P/CF looks attractive when compared to its industry's average P/CF of 9.36. PWR's P/CF has been as high as 11.01 and as low as 7.26, with a median of 9.33, all within the past year.

These figures are just a handful of the metrics value investors tend to look at, but they help show that Quanta Services is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, PWR feels like a great value stock at the moment.


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