Are Investors Undervaluing Seaspan (ATCO) Right Now?

Zacks Equity Research

Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. 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 to watch right now is Seaspan (ATCO). ATCO is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock is trading with P/E ratio of 6.97 right now. For comparison, its industry sports an average P/E of 13.07. Over the past year, ATCO's Forward P/E has been as high as 18.28 and as low as 6.37, with a median of 13.76.

ATCO is also sporting a PEG ratio of 0.60. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. ATCO's industry has an average PEG of 1.34 right now. Within the past year, ATCO's PEG has been as high as 2.81 and as low as 0.55, with a median of 1.11.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's 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. ATCO has a P/S ratio of 1.22. This compares to its industry's average P/S of 1.49.

Value investors will likely look at more than just these metrics, but the above data helps show that Seaspan is likely undervalued currently. And when considering the strength of its earnings outlook, ATCO sticks out at as one of the market's strongest value stocks.


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