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Is Sierra Metals Inc. (SMTS) Stock Undervalued Right Now?

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Zacks Equity Research
·3 min read
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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.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader 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.

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 company value investors might notice is Sierra Metals Inc. (SMTS). SMTS is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock has a Forward P/E ratio of 8.87. This compares to its industry's average Forward P/E of 11. Over the past year, SMTS's Forward P/E has been as high as 12.50 and as low as 3.09, with a median of 7.77.

We should also highlight that SMTS has a P/B ratio of 2.14. 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 company's current P/B looks solid when compared to its industry's average P/B of 3.36. SMTS's P/B has been as high as 2.58 and as low as 0.53, with a median of 1.28, 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. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. SMTS has a P/S ratio of 2.08. This compares to its industry's average P/S of 3.52.

Finally, investors will want to recognize that SMTS has a P/CF ratio of 9.19. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 34.75. SMTS's P/CF has been as high as 11.06 and as low as 2.62, with a median of 6, 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 Sierra Metals Inc. Is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, SMTS feels like a great value stock at the moment.


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Zacks Investment Research