Should Value Investors Buy Sappi (SPPJY) Stock?
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 rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.
One company to watch right now is Sappi (SPPJY). SPPJY is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock is trading with a P/E ratio of 8.09, which compares to its industry's average of 10.86. Over the last 12 months, SPPJY's Forward P/E has been as high as 9.72 and as low as 5, with a median of 7.21.
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. SPPJY has a P/S ratio of 0.22. This compares to its industry's average P/S of 0.54.
Finally, we should also recognize that SPPJY has a P/CF ratio of 2.35. 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. This stock's P/CF looks attractive against its industry's average P/CF of 5.02. Over the past year, SPPJY's P/CF has been as high as 2.82 and as low as 1.51, with a median of 2.15.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Sappi is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, SPPJY feels like a great value stock at the moment.
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Sappi Ltd. (SPPJY) : Free Stock Analysis Report
