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Should Value Investors Buy Adecoagro (AGRO) Stock?

Zacks Equity Research
·2 min read

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.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. 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.

Adecoagro (AGRO) is a stock many investors are watching right now. AGRO is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock holds a P/E ratio of 7.12, while its industry has an average P/E of 18.74. Over the past 52 weeks, AGRO's Forward P/E has been as high as 29.54 and as low as 6.71, with a median of 12.51.

Another valuation metric that we should highlight is AGRO's P/B ratio of 0.47. 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 0.88. Over the past 12 months, AGRO's P/B has been as high as 1.01 and as low as 0.44, with a median of 0.72.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. AGRO has a P/S ratio of 0.56. This compares to its industry's average P/S of 0.78.

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


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