Are Investors Undervaluing FORTERRA INC (FRTA) 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 tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
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 FORTERRA INC (FRTA). FRTA is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock is trading with a P/E ratio of 16.31, which compares to its industry's average of 26.07. Over the last 12 months, FRTA's Forward P/E has been as high as 59.20 and as low as -128.05, with a median of 12.62.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. FRTA has a P/S ratio of 0.61. This compares to its industry's average P/S of 0.81.
Finally, we should also recognize that FRTA has a P/CF ratio of 7.26. 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. This company's current P/CF looks solid when compared to its industry's average P/CF of 22.15. Over the past year, FRTA's P/CF has been as high as 10.14 and as low as 2.34, with a median of 6.12.
Value investors will likely look at more than just these metrics, but the above data helps show that FORTERRA INC is likely undervalued currently. And when considering the strength of its earnings outlook, FRTA sticks out at as one of the market's strongest value stocks.
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