Are Investors Undervaluing Covenant Logistics (CVLG) 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.
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 fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
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 to watch right now is Covenant Logistics (CVLG). CVLG is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock is trading with P/E ratio of 13.23 right now. For comparison, its industry sports an average P/E of 24.67. Over the last 12 months, CVLG's Forward P/E has been as high as 31.02 and as low as 5.66, with a median of 13.18.
We should also highlight that CVLG has a P/B ratio of 1.11. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. This company's current P/B looks solid when compared to its industry's average P/B of 3.05. CVLG's P/B has been as high as 1.14 and as low as 0.34, with a median of 0.72, over the past year.
Finally, our model also underscores that CVLG has a P/CF ratio of 6.61. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. CVLG's current P/CF looks attractive when compared to its industry's average P/CF of 14.67. Within the past 12 months, CVLG's P/CF has been as high as 6.78 and as low as 1.48, with a median of 2.81.
Value investors will likely look at more than just these metrics, but the above data helps show that Covenant Logistics is likely undervalued currently. And when considering the strength of its earnings outlook, CVLG sticks out at as one of the market's strongest value stocks.
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