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Should Value Investors Buy Cardtronics (CATM) Stock?

Zacks Equity Research

While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.

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 tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

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 stock to keep an eye on is Cardtronics (CATM). CATM is currently sporting a Zacks Rank of #1 (Strong Buy) and an A for Value. The stock is trading with a P/E ratio of 15.01, which compares to its industry's average of 25.36. Over the last 12 months, CATM's Forward P/E has been as high as 20.86 and as low as 11.54, with a median of 15.11.

Another valuation metric that we should highlight is CATM's P/B ratio of 4.08. Investors use the P/B ratio to look at a stock's market value versus 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 11.77. Over the past 12 months, CATM's P/B has been as high as 4.60 and as low as 2.67, with a median of 3.65.

Finally, our model also underscores that CATM has a P/CF ratio of 7.26. 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. CATM's current P/CF looks attractive when compared to its industry's average P/CF of 25.64. Within the past 12 months, CATM's P/CF has been as high as 8.49 and as low as 4.84, with a median of 6.77.

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


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