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Should Value Investors Buy Uniti Group (UNIT) Stock?

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Zacks Equity Research
·2 min read
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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.

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 fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

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 Uniti Group (UNIT). UNIT is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock is trading with a P/E ratio of 6.31, which compares to its industry's average of 17.99. UNIT's Forward P/E has been as high as 7.10 and as low as 2.48, with a median of 3.96, all within the past year.

Investors should also note that UNIT holds a PEG ratio of 1.58. 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. UNIT's industry currently sports an average PEG of 2.88. Over the last 12 months, UNIT's PEG has been as high as 1.73 and as low as 0.96, with a median of 1.17.

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. UNIT has a P/S ratio of 1.92. This compares to its industry's average P/S of 4.6.

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


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Zacks Investment Research