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Should Value Investors Buy Internet Initiative Japan (IIJIY) Stock?

Zacks Equity Research

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.

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.

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.

One stock to keep an eye on is Internet Initiative Japan (IIJIY). IIJIY is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock is trading with a P/E ratio of 25.71, which compares to its industry's average of 30.75. Over the past year, IIJIY's Forward P/E has been as high as 25.71 and as low as 18.40, with a median of 20.41.

We also note that IIJIY holds a PEG ratio of 1.60. 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. IIJIY's PEG compares to its industry's average PEG of 1.70. IIJIY's PEG has been as high as 1.66 and as low as 1.37, with a median of 1.60, all within the past year.

We should also highlight that IIJIY has a P/B ratio of 1.99. 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. IIJIY's current P/B looks attractive when compared to its industry's average P/B of 5.35. Over the past 12 months, IIJIY's P/B has been as high as 1.99 and as low as 1.17, with a median of 1.41.

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. IIJIY has a P/S ratio of 0.8. This compares to its industry's average P/S of 1.99.

Finally, our model also underscores that IIJIY has a P/CF ratio of 6.58. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. IIJIY's P/CF compares to its industry's average P/CF of 24.33. Over the past 52 weeks, IIJIY's P/CF has been as high as 6.58 and as low as 4.34, with a median of 5.45.

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


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