Is Alcoa (AA) a Great Value Stock Right Now?
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.
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.
Alcoa (AA) is a stock many investors are watching right now. AA is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A.
Another notable valuation metric for AA is its P/B ratio of 0.48. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. AA's current P/B looks attractive when compared to its industry's average P/B of 1.20. AA's P/B has been as high as 0.68 and as low as 0.17, with a median of 0.49, over the past year.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. AA has a P/S ratio of 0.27. This compares to its industry's average P/S of 0.51.
These are just a handful of the figures considered in Alcoa's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that AA is an impressive value stock right now.
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