Should Value Investors Buy United States Steel (X) Stock?
While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.
Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.
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 company value investors might notice is United States Steel (X). X is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock is trading with P/E ratio of 8.42 right now. For comparison, its industry sports an average P/E of 8.49. X's Forward P/E has been as high as 26.16 and as low as 2.20, with a median of 7.58, all within the past year.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. X has a P/S ratio of 0.28. This compares to its industry's average P/S of 0.35.
Finally, investors will want to recognize that X has a P/CF ratio of 2.39. 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. This company's current P/CF looks solid when compared to its industry's average P/CF of 8.63. X's P/CF has been as high as 2.59 and as low as 0.87, with a median of 2, all within the past year.
Olympic Steel (ZEUS) may be another strong Steel - Producers stock to add to your shortlist. ZEUS is a # 2 (Buy) stock with a Value grade of A.
Furthermore, Olympic Steel holds a P/B ratio of 1.11 and its industry's price-to-book ratio is 1.66. ZEUS's P/B has been as high as 1.27, as low as 0.50, with a median of 0.85 over the past 12 months.
Value investors will likely look at more than just these metrics, but the above data helps show that United States Steel and Olympic Steel are likely undervalued currently. And when considering the strength of its earnings outlook, X and ZEUS sticks out as one of the market's strongest value stocks.
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United States Steel Corporation (X) : Free Stock Analysis Report
Olympic Steel, Inc. (ZEUS) : Free Stock Analysis Report
