We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Is Teck Resources (TECK) A Suitable Value Pick Right Now?
Read MoreHide Full Article
Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Teck Resources Limited (TECK - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Teck Resources has a trailing twelve months PE ratio of 7.21. This level compares significantly favorably with the market at large, as the PE ratio for the S&P 500 comes in at about 20.34.
If we focus on the long-term trend of the stock, the current level puts Teck Resources’ current PE among its lowest territory over the observed period. This suggests that the stock is undervalued compared to its own historical levels and thus it could prove to be an extremely suitable entry point from a PE perspective.
Further, the stock’s PE also compares considerably favorably with the Zacks classified Mining – Miscellaneous industry’s trailing twelve months PE ratio, which stands at 38.85. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that Teck Resources has a forward PE ratio (price relative to this year’s earnings) of just 5.04 – lower than the current figure. So it is fair to say that a slightly more value-oriented path may be ahead for Teck Resources stock in the near term too.
PS Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Teck Resources has a P/S ratio of about 1.20. This is lower than the Zacks categorized Mining – Miscellaneous industry average, which comes in at 6.75 right now.
If anything, TECK is in the lower end of its range in the time period from a P/S metric, suggesting some level of undervalued trading—at least compared to historical norms.
Broad Value Outlook
In aggregate, Teck Resources currently has a Zacks Value Style Score of ‘A’, putting it into the top 20% of all stocks we cover from this look. This makes Teck Resources a solid choice for value investors, and some of its other key metrics make this pretty clear too.
For example, the PEG ratio for Teck Resources is just 0.58, a level that is far lower than the industry average of 1.45. The PEG ratio is a modified PE ratio that takes into account the stock’s earnings growth rate. Additionally, its P/CF ratio (another great indicator of value) comes in at 3.17, while the industry’s average stands at a negative 1.79. Thus, while the industry is experiencing negative cash flows, TECK’s financial health seems much better. Clearly, TECK is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though Teck Resources might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘A’ and a Momentum score of ‘F’. This gives TECK a Zacks VGM score—or its overarching fundamental grade—of ‘A’. (You can read more about the Zacks Style Scores here >>)
Our VGM Score identifies stocks that have the most attractive value, growth, and momentum characteristics, and a good VGM score can increase your odds of success. All things considered, Teck Resources seems to have pretty striking prospects.
However, the company’s recent earnings estimates have been trending downwards lately. The current quarter has seen one estimate go higher in the past thirty days compared to three lower, while the full year estimate has seen one upward revision and three downward revisions in the same time period.
This has had a meaningful impact on the consensus estimate as the current quarter consensus estimate has declined 12.9%, while the full year estimate has moved down nearly 2%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
This negative trend is why the stock has just a Zacks Rank #3 (Hold) despite strong value metrics and why we are looking for in-line performance from the company in the near term.
Bottom Line
Teck Resources is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. However, with a sluggish industry rank (Bottom 14% out of more than 250 industries) and a Zacks Rank #3, it is hard to get too excited about this company overall.
In fact, over the past two years, the Zacks Mining – Miscellaneous industry has clearly underperformed the broader market, as you can see below:
So, value investors might want to wait for estimates and analyst sentiment to turn around in this name first, but once that happens, this stock could be a compelling pick.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation. See Them Free>>
Unique Zacks Analysis of Your Chosen Ticker
Pick one free report - opportunity may be withdrawn at any time
Image: Bigstock
Is Teck Resources (TECK) A Suitable Value Pick Right Now?
Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Teck Resources Limited (TECK - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Teck Resources has a trailing twelve months PE ratio of 7.21. This level compares significantly favorably with the market at large, as the PE ratio for the S&P 500 comes in at about 20.34.
If we focus on the long-term trend of the stock, the current level puts Teck Resources’ current PE among its lowest territory over the observed period. This suggests that the stock is undervalued compared to its own historical levels and thus it could prove to be an extremely suitable entry point from a PE perspective.
Further, the stock’s PE also compares considerably favorably with the Zacks classified Mining – Miscellaneous industry’s trailing twelve months PE ratio, which stands at 38.85. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that Teck Resources has a forward PE ratio (price relative to this year’s earnings) of just 5.04 – lower than the current figure. So it is fair to say that a slightly more value-oriented path may be ahead for Teck Resources stock in the near term too.
PS Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Teck Resources has a P/S ratio of about 1.20. This is lower than the Zacks categorized Mining – Miscellaneous industry average, which comes in at 6.75 right now.
If anything, TECK is in the lower end of its range in the time period from a P/S metric, suggesting some level of undervalued trading—at least compared to historical norms.
Broad Value Outlook
In aggregate, Teck Resources currently has a Zacks Value Style Score of ‘A’, putting it into the top 20% of all stocks we cover from this look. This makes Teck Resources a solid choice for value investors, and some of its other key metrics make this pretty clear too.
For example, the PEG ratio for Teck Resources is just 0.58, a level that is far lower than the industry average of 1.45. The PEG ratio is a modified PE ratio that takes into account the stock’s earnings growth rate. Additionally, its P/CF ratio (another great indicator of value) comes in at 3.17, while the industry’s average stands at a negative 1.79. Thus, while the industry is experiencing negative cash flows, TECK’s financial health seems much better. Clearly, TECK is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though Teck Resources might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘A’ and a Momentum score of ‘F’. This gives TECK a Zacks VGM score—or its overarching fundamental grade—of ‘A’. (You can read more about the Zacks Style Scores here >>)
Our VGM Score identifies stocks that have the most attractive value, growth, and momentum characteristics, and a good VGM score can increase your odds of success. All things considered, Teck Resources seems to have pretty striking prospects.
However, the company’s recent earnings estimates have been trending downwards lately. The current quarter has seen one estimate go higher in the past thirty days compared to three lower, while the full year estimate has seen one upward revision and three downward revisions in the same time period.
This has had a meaningful impact on the consensus estimate as the current quarter consensus estimate has declined 12.9%, while the full year estimate has moved down nearly 2%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Teck Resources Ltd Price and Consensus
Teck Resources Ltd Price and Consensus | Teck Resources Ltd Quote
This negative trend is why the stock has just a Zacks Rank #3 (Hold) despite strong value metrics and why we are looking for in-line performance from the company in the near term.
Bottom Line
Teck Resources is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. However, with a sluggish industry rank (Bottom 14% out of more than 250 industries) and a Zacks Rank #3, it is hard to get too excited about this company overall.
In fact, over the past two years, the Zacks Mining – Miscellaneous industry has clearly underperformed the broader market, as you can see below:
So, value investors might want to wait for estimates and analyst sentiment to turn around in this name first, but once that happens, this stock could be a compelling pick.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation. See Them Free>>