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Should Value Investors Buy Cosan (CZZ) 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.

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.

Cosan (CZZ) is a stock many investors are watching right now. CZZ is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock holds a P/E ratio of 16.13, while its industry has an average P/E of 17.91. Over the past 52 weeks, CZZ's Forward P/E has been as high as 19.16 and as low as 11.25, with a median of 14.06.

Investors will also notice that CZZ has a PEG ratio of 1.01. 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. CZZ's PEG compares to its industry's average PEG of 1.13. CZZ's PEG has been as high as 1.01 and as low as 0.76, with a median of 0.82, all within the past year.

Investors should also recognize that CZZ has a P/B ratio of 1.26. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. CZZ's current P/B looks attractive when compared to its industry's average P/B of 1.63. Within the past 52 weeks, CZZ's P/B has been as high as 1.26 and as low as 0.44, with a median of 0.75.

Finally, we should also recognize that CZZ has a P/CF ratio of 4.73. 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. This company's current P/CF looks solid when compared to its industry's average P/CF of 14.78. CZZ's P/CF has been as high as 4.73 and as low as 2.43, with a median of 3.42, all within the past year.

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


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