Should Value Investors Buy Kemet (KEM) Stock?
Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.
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 a variety of methods, including tried-and-true valuation metrics, to find these stocks.
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.
Kemet (KEM) is a stock many investors are watching right now. KEM is currently sporting a Zacks Rank of #1 (Strong Buy), as well as an A grade for Value. The stock is trading with a P/E ratio of 5.35, which compares to its industry's average of 14.32. Over the past 52 weeks, KEM's Forward P/E has been as high as 15.47 and as low as 5.15, with a median of 9.86.
Another notable valuation metric for KEM is its P/B ratio of 2.20. 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 company's current P/B looks solid when compared to its industry's average P/B of 2.31. Over the past year, KEM's P/B has been as high as 3.62 and as low as 1.63, with a median of 2.36.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by 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. KEM has a P/S ratio of 0.83. This compares to its industry's average P/S of 1.23.
Finally, investors should note that KEM has a P/CF ratio of 8.09. 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. KEM's P/CF compares to its industry's average P/CF of 9.55. KEM's P/CF has been as high as 14.64 and as low as 2.42, with a median of 4.27, all within the past year.
These are only a few of the key metrics included in Kemet's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, KEM looks like an impressive value stock at the moment.
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