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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.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. 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 Quanta Services (PWR). PWR is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock holds a P/E ratio of 10.57, while its industry has an average P/E of 14.24. Over the last 12 months, PWR's Forward P/E has been as high as 12.02 and as low as 8.48, with a median of 10.45.

Investors will also notice that PWR has a PEG ratio of 0.73. 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. PWR's PEG compares to its industry's average PEG of 1.06. Within the past year, PWR's PEG has been as high as 1.42 and as low as 0.71, with a median of 1.30.

We should also highlight that PWR has a P/B ratio of 1.50. 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 stock's P/B looks attractive against its industry's average P/B of 1.89. PWR's P/B has been as high as 1.59 and as low as 1.09, with a median of 1.43, over the past year.

Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. PWR has a P/S ratio of 0.48. This compares to its industry's average P/S of 0.68.

Finally, investors will want to recognize that PWR has a P/CF ratio of 9.99. 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 16.12. Over the past 52 weeks, PWR's P/CF has been as high as 10.59 and as low as 7.26, with a median of 9.40.

These are just a handful of the figures considered in Quanta Services'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 PWR is an impressive value stock right now.


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