Are Investors Undervaluing EmbraerEmpresa Brasileira de Aeronautica (ERJ) Right Now?

ERJ

Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore 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 a variety of methods, including tried-and-true valuation metrics, to find these stocks.

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.

EmbraerEmpresa Brasileira de Aeronautica (ERJ - Free Report) is a stock many investors are watching right now. ERJ is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock holds a P/E ratio of 13.22, while its industry has an average P/E of 18.30. Over the past year, ERJ's Forward P/E has been as high as 99.27 and as low as -49.52, with a median of 37.82.

Investors will also notice that ERJ has a PEG ratio of 0.78. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. ERJ's PEG compares to its industry's average PEG of 1.34. ERJ's PEG has been as high as 5.84 and as low as -2.91, with a median of 2.22, all within the past year.

Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. ERJ has a P/S ratio of 0.45. This compares to its industry's average P/S of 1.2.

These are only a few of the key metrics included in EmbraerEmpresa Brasileira de Aeronautica's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, ERJ looks like an impressive value stock at the moment.

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