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Should Value Investors Consider Konica Minolta (KNCAY) Stock?
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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 Konica Minolta, Inc. (KNCAY - 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, Konica Minolta has a trailing twelve months PE ratio of 16.2, as you can see in the chart below:
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 stands at about 20.7. While Konica Minolta’s current PE level puts it above its midpoint of 14.2 over the past five years, it stands below the highs for the stock, thus signaling some scope for entry still.
Further, the stock’s PE compares favorably with the Zacks Computer & Technology sector’s trailing twelve months PE ratio, which stands at approximately 24. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that Konica Minolta’s forward PE is roughly same as its trailing twelve months value, so we might say that the forward earnings estimates are incorporated in the company’s share price as of now. We define forward PE as current price relative to the Zacks Consensus Estimate for the current fiscal year.
P/S 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, Konica Minolta has a P/S ratio of about 0.5. This is much lower than the S&P 500 average, which comes in at 3.4 right now. This makes the stock undervalued from this aspect too.
Broad Value Outlook
In aggregate, Konica Minolta currently has a Value Score of A, putting it into the top 20% of all stocks we cover from this look. This makes Konica Minolta a solid choice for value investors.
What About the Stock Overall?
Though Konica Minolta 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 Score of D and a Momentum Score of C. This gives KNCAY a Zacks VGM score — or its overarching fundamental grade — of B. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the Zacks Consensus Estimate for the full year has increased 11.7% over the past 60 days. Thanks to this bullish trend, the stock sports a Zacks Rank #1 (Strong Buy), which indicates why we are looking for outperformance from the company in the near term.
Bottom Line
Konica Minolta is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Moreover, this Zacks Rank #1 company boasts a solid Zacks Industry Rank (among Top 6% of more than 250 industries), thus hinting at favorable broader factors. In fact, over the past year, the industry has clearly outperformed the broader market, as you can see below:
So, it might pay for value investors to delve deeper into the company’s prospects, as fundamentals indicate that this stock could be a compelling pick.
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While we share many recommendations and ideas with the public, certain moves are hidden from everyone but selected members of our portfolio services. Would you like to peek behind the curtain today and view them?
Starting now, for the next month, I invite you to follow all Zacks' private buys and sells in real time from value to momentum...from stocks under $10 to ETF to option movers...from insider trades to companies that are about to report positive earnings surprises (we've called them with 80%+ accuracy). You can even look inside portfolios so exclusive that they are normally closed to new investors.
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Should Value Investors Consider Konica Minolta (KNCAY) Stock?
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?
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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 Konica Minolta, Inc. (KNCAY - 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, Konica Minolta has a trailing twelve months PE ratio of 16.2, as you can see in the chart below:
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 stands at about 20.7. While Konica Minolta’s current PE level puts it above its midpoint of 14.2 over the past five years, it stands below the highs for the stock, thus signaling some scope for entry still.
Further, the stock’s PE compares favorably with the Zacks Computer & Technology sector’s trailing twelve months PE ratio, which stands at approximately 24. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that Konica Minolta’s forward PE is roughly same as its trailing twelve months value, so we might say that the forward earnings estimates are incorporated in the company’s share price as of now. We define forward PE as current price relative to the Zacks Consensus Estimate for the current fiscal year.
P/S 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, Konica Minolta has a P/S ratio of about 0.5. This is much lower than the S&P 500 average, which comes in at 3.4 right now. This makes the stock undervalued from this aspect too.
Broad Value Outlook
In aggregate, Konica Minolta currently has a Value Score of A, putting it into the top 20% of all stocks we cover from this look. This makes Konica Minolta a solid choice for value investors.
What About the Stock Overall?
Though Konica Minolta 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 Score of D and a Momentum Score of C. This gives KNCAY a Zacks VGM score — or its overarching fundamental grade — of B. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the Zacks Consensus Estimate for the full year has increased 11.7% over the past 60 days. Thanks to this bullish trend, the stock sports a Zacks Rank #1 (Strong Buy), which indicates why we are looking for outperformance from the company in the near term.
Bottom Line
Konica Minolta is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Moreover, this Zacks Rank #1 company boasts a solid Zacks Industry Rank (among Top 6% of more than 250 industries), thus hinting at favorable broader factors. In fact, over the past year, the industry has clearly outperformed the broader market, as you can see below:
So, it might pay for value investors to delve deeper into the company’s prospects, as fundamentals indicate that this stock could be a compelling pick.
Zacks' Hidden Trades
While we share many recommendations and ideas with the public, certain moves are hidden from everyone but selected members of our portfolio services. Would you like to peek behind the curtain today and view them?
Starting now, for the next month, I invite you to follow all Zacks' private buys and sells in real time from value to momentum...from stocks under $10 to ETF to option movers...from insider trades to companies that are about to report positive earnings surprises (we've called them with 80%+ accuracy). You can even look inside portfolios so exclusive that they are normally closed to new investors.
Click here for Zacks' secret trade>>