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Is Arch Coal (ARCH) a Great Value Stock Right Now?


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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, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

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 stock to keep an eye on is Arch Coal (ARCH). ARCH is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock has a Forward P/E ratio of 6.61. This compares to its industry's average Forward P/E of 9.11. ARCH's Forward P/E has been as high as 9.97 and as low as 5.53, with a median of 8.46, all within the past year.

Investors should also recognize that ARCH has a P/B ratio of 2.39. 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. ARCH's current P/B looks attractive when compared to its industry's average P/B of 4.13. Over the past 12 months, ARCH's P/B has been as high as 3.32 and as low as 2.16, with a median of 2.55.

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. ARCH has a P/S ratio of 0.68. This compares to its industry's average P/S of 1.41.

These are only a few of the key metrics included in Arch Coal's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, ARCH looks like an impressive value stock at the moment.


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.





This article appears in: Investing , Investing Ideas , Stocks
Referenced Symbols: ARCH




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