Is Construction Partners (ROAD) Stock Undervalued 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.
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.
Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.
One company to watch right now is Construction Partners (ROAD). ROAD is currently sporting a Zacks Rank of #1 (Strong Buy) and an A for Value.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. ROAD has a P/S ratio of 0.97. This compares to its industry's average P/S of 1.07.
Finally, investors should note that ROAD has a P/CF ratio of 10.70. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 13.27. ROAD's P/CF has been as high as 11.15 and as low as 5.51, with a median of 8.37, all within the past year.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Construction Partners is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, ROAD feels like a great value stock at the moment.
Click to get this free report
Construction Partners, Inc. (ROAD): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.