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Is Trecora (TREC) Stock Undervalued Right Now?

Zacks Equity Research

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 fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

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 Trecora (TREC). TREC is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value.

Another notable valuation metric for TREC is its P/B ratio of 0.88. 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. TREC's current P/B looks attractive when compared to its industry's average P/B of 1.77. Within the past 52 weeks, TREC's P/B has been as high as 1.35 and as low as 0.88, with a median of 1.18.

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. TREC has a P/S ratio of 0.62. This compares to its industry's average P/S of 0.86.

Finally, we should also recognize that TREC has a P/CF ratio of 10.45. 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. TREC's P/CF compares to its industry's average P/CF of 10.75. Over the past year, TREC's P/CF has been as high as 19.76 and as low as 10.45, with a median of 15.96.

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


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