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Should Value Investors Buy CAI International (CAI) Stock?

Zacks Equity Research
Energy Transfer LP (ET) closed at $15.28 in the latest trading session, marking a -0.39% move from the prior day.

Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

One stock to keep an eye on is CAI International (CAI). CAI is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock is trading with a P/E ratio of 6.08, which compares to its industry's average of 11.54. Over the last 12 months, CAI's Forward P/E has been as high as 6.70 and as low as 4.95, with a median of 5.69.

Investors should also note that CAI holds a PEG ratio of 0.76. 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. CAI's industry currently sports an average PEG of 1.13. Within the past year, CAI's PEG has been as high as 0.84 and as low as 0.62, with a median of 0.71.

Another valuation metric that we should highlight is CAI's P/B ratio of 0.85. 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 1.36. Over the past year, CAI's P/B has been as high as 0.97 and as low as 0.65, with a median of 0.79.

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. CAI has a P/S ratio of 1.22. This compares to its industry's average P/S of 1.28.

Finally, investors will want to recognize that CAI has a P/CF ratio of 2.33. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 4.39. Over the past year, CAI's P/CF has been as high as 2.67 and as low as 1.76, with a median of 2.22.

Value investors will likely look at more than just these metrics, but the above data helps show that CAI International is likely undervalued currently. And when considering the strength of its earnings outlook, CAI sticks out at as one of the market's strongest value stocks.


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