Are Investors Undervaluing VALE (VALE) Right Now?

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.

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.

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 value investors might notice is VALE (VALE). VALE is currently holding a Zacks Rank #1 (Strong Buy) and a Value grade of A. The stock is trading with a P/E ratio of 6.26, which compares to its industry's average of 7.64. Over the past year, VALE's Forward P/E has been as high as 6.26 and as low as 4.05, with a median of 5.17.

Investors will also notice that VALE has a PEG ratio of 0.29. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. VALE's PEG compares to its industry's average PEG of 0.46. VALE's PEG has been as high as 4.05 and as low as 0.23, with a median of 0.29, all within the past year.

Investors should also recognize that VALE has a P/B ratio of 1.22. The P/B is a method of comparing a stock's market value to 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 1.73. Within the past 52 weeks, VALE's P/B has been as high as 1.40 and as low as 1.00, with a median of 1.17.

Finally, we should also recognize that VALE has a P/CF ratio of 5.61. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 8.04. Over the past year, VALE's P/CF has been as high as 5.64 and as low as 3.01, with a median of 4.42.

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

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research