Is TransAlta (TAC) Stock Undervalued Right Now?
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 a variety of methods, including tried-and-true valuation metrics, to find these stocks.
Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.
One company value investors might notice is TransAlta (TAC). TAC is currently sporting a Zacks Rank of #2 (Buy) and an A for Value.
We should also highlight that TAC has a P/B ratio of 1.72. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. TAC's current P/B looks attractive when compared to its industry's average P/B of 1.88. Within the past 52 weeks, TAC's P/B has been as high as 2.86 and as low as 1.64, with a median of 2.48.
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. TAC has a P/S ratio of 0.86. This compares to its industry's average P/S of 1.72.
These figures are just a handful of the metrics value investors tend to look at, but they help show that TransAlta is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, TAC feels like a great value stock at the moment.
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TransAlta Corporation (TAC) : Free Stock Analysis Report
