Should Value Investors Buy Ultra Clean Holdings (UCTT) 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.
Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. 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 company to watch right now is Ultra Clean Holdings (UCTT). UCTT is currently sporting a Zacks Rank of #1 (Strong Buy), as well as an A grade for Value. The stock has a Forward P/E ratio of 10.41. This compares to its industry's average Forward P/E of 22.08. UCTT's Forward P/E has been as high as 24.71 and as low as 6.56, with a median of 15.11, all within the past year.
UCTT is also sporting a PEG ratio of 1.30. 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. UCTT's industry currently sports an average PEG of 2.76. Over the last 12 months, UCTT's PEG has been as high as 2.52 and as low as 0.47, with a median of 1.20.
Another valuation metric that we should highlight is UCTT's P/B ratio of 2.13. 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 stock's P/B looks attractive against its industry's average P/B of 3.31. Within the past 52 weeks, UCTT's P/B has been as high as 2.55 and as low as 0.99, with a median of 1.89.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. UCTT has a P/S ratio of 0.8. This compares to its industry's average P/S of 1.66.
Value investors will likely look at more than just these metrics, but the above data helps show that Ultra Clean Holdings is likely undervalued currently. And when considering the strength of its earnings outlook, UCTT sticks out at as one of the market's strongest value stocks.
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