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Is Covenant Transportation (CVTI) 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.

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.

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 stock to keep an eye on is Covenant Transportation (CVTI). CVTI is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock holds a P/E ratio of 10.03, while its industry has an average P/E of 14.26. CVTI's Forward P/E has been as high as 31.88 and as low as 9.61, with a median of 15.45, all within the past year.

Another notable valuation metric for CVTI is its P/B ratio of 1.48. 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 solid versus its industry's average P/B of 2.30. Over the past year, CVTI's P/B has been as high as 2.24 and as low as 1.42, with a median of 1.80.

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. CVTI has a P/S ratio of 0.56. This compares to its industry's average P/S of 0.92.

Finally, our model also underscores that CVTI has a P/CF ratio of 3.32. 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. CVTI's current P/CF looks attractive when compared to its industry's average P/CF of 8.71. Within the past 12 months, CVTI's P/CF has been as high as 6.39 and as low as 3.18, with a median of 4.08.

These figures are just a handful of the metrics value investors tend to look at, but they help show that Covenant Transportation is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, CVTI feels like a great value stock at the moment.

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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.


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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