Is Cosan (CZZ) Stock Undervalued Right Now?
While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.
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.
In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.
One company value investors might notice is Cosan (CZZ). CZZ is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock has a Forward P/E ratio of 14.16. This compares to its industry's average Forward P/E of 18.15. Over the past 52 weeks, CZZ's Forward P/E has been as high as 19.16 and as low as 2.82, with a median of 11.43.
We should also highlight that CZZ has a P/B ratio of 0.75. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. This stock's P/B looks attractive against its industry's average P/B of 1.25. CZZ's P/B has been as high as 0.75 and as low as 0.34, with a median of 0.49, over the past year.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. CZZ has a P/S ratio of 0.66. This compares to its industry's average P/S of 0.67.
Finally, investors should note that CZZ has a P/CF ratio of 3.54. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. CZZ's current P/CF looks attractive when compared to its industry's average P/CF of 6.65. CZZ's P/CF has been as high as 3.59 and as low as 1.81, with a median of 2.74, all within the past year.
Value investors will likely look at more than just these metrics, but the above data helps show that Cosan is likely undervalued currently. And when considering the strength of its earnings outlook, CZZ 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.