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.
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 tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
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.
EmbraerEmpresa Brasileira de Aeronautica (ERJ) is a stock many investors are watching right now. ERJ 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 15.83. This compares to its industry's average Forward P/E of 21.71. ERJ's Forward P/E has been as high as 24.12 and as low as 13.64, with a median of 17.72, all within the past year.
Investors should also note that ERJ holds a PEG ratio of 0.98. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. ERJ's industry has an average PEG of 1.74 right now. Over the past 52 weeks, ERJ's PEG has been as high as 1.08 and as low as 0.88, with a median of 0.95.
Another valuation metric that we should highlight is ERJ's P/B ratio of 2.22. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. This stock's P/B looks solid versus its industry's average P/B of 4.49. Over the past 12 months, ERJ's P/B has been as high as 3.10 and as low as 1.44, with a median of 1.94.
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. ERJ has a P/S ratio of 1.24. This compares to its industry's average P/S of 1.71.
Finally, investors will want to recognize that ERJ has a P/CF ratio of 12.45. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. ERJ's current P/CF looks attractive when compared to its industry's average P/CF of 27.62. Over the past 52 weeks, ERJ's P/CF has been as high as 17.38 and as low as 7.62, with a median of 9.70.
These figures are just a handful of the metrics value investors tend to look at, but they help show that EmbraerEmpresa Brasileira de Aeronautica is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, ERJ feels like a great value stock at the moment.
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Embraer-Empresa Brasileira de Aeronautica (ERJ): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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