Should Value Investors Buy AES (AES) Stock?
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.
Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
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 value investors might notice is AES (AES). AES is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock has a Forward P/E ratio of 11.32. This compares to its industry's average Forward P/E of 14.16. Over the last 12 months, AES's Forward P/E has been as high as 13.65 and as low as 10.41, with a median of 11.92.
AES is also sporting a PEG ratio of 1.33. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. AES's PEG compares to its industry's average PEG of 2.30. Within the past year, AES's PEG has been as high as 1.75 and as low as 1.18, with a median of 1.42.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. AES has a P/S ratio of 1.01. This compares to its industry's average P/S of 2.2.
These are only a few of the key metrics included in AES's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, AES looks like an impressive value stock at the moment.
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