Are Investors Undervaluing Alliance Resource Partners (ARLP) Right Now?

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, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

One company to watch right now is Alliance Resource Partners (ARLP). ARLP 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 6.01. This compares to its industry's average Forward P/E of 9.02. Over the last 12 months, ARLP's Forward P/E has been as high as 6.01 and as low as 3.08, with a median of 4.14.

Finally, investors should note that ARLP has a P/CF ratio of 3.68. 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 stock's P/CF looks attractive against its industry's average P/CF of 5.44. ARLP's P/CF has been as high as 3.68 and as low as 2.19, with a median of 2.75, all within the past year.

Value investors will likely look at more than just these metrics, but the above data helps show that Alliance Resource Partners is likely undervalued currently. And when considering the strength of its earnings outlook, ARLP sticks out at as one of the market's strongest value stocks.

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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.

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