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Should Value Investors Buy Ashtead Group PLC (ASHTY) Stock?

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.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

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 to watch right now is Ashtead Group PLC (ASHTY). ASHTY is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock has a Forward P/E ratio of 9.70. This compares to its industry's average Forward P/E of 14.83. ASHTY's Forward P/E has been as high as 15.63 and as low as 8.28, with a median of 12.87, all within the past year.

We also note that ASHTY holds a PEG ratio of 0.44. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. ASHTY's PEG compares to its industry's average PEG of 0.99. Within the past year, ASHTY's PEG has been as high as 1.04 and as low as 0.44, with a median of 0.83.

Another valuation metric that we should highlight is ASHTY's P/B ratio of 3.41. 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 solid versus its industry's average P/B of 6.01. Over the past year, ASHTY's P/B has been as high as 4.77 and as low as 2.71, with a median of 4.10.

Finally, investors should note that ASHTY has a P/CF ratio of 5.04. 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. ASHTY's current P/CF looks attractive when compared to its industry's average P/CF of 17.71. Within the past 12 months, ASHTY's P/CF has been as high as 10.88 and as low as 4, with a median of 6.76.

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

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Zacks Investment Research