Is Ultrapar Participacoes (UGP) Stock Undervalued Right Now?

UGP

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, 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.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

Ultrapar Participacoes (UGP - Free Report) is a stock many investors are watching right now. UGP is currently holding a Zacks Rank of #1 (Strong Buy) and a Value grade of A.

UGP is also sporting a PEG ratio of 3.60. 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. UGP's PEG compares to its industry's average PEG of 3.80. Over the past 52 weeks, UGP's PEG has been as high as 5.36 and as low as 0.47, with a median of 3.96.

Finally, we should also recognize that UGP has a P/CF ratio of 6.58. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. UGP's current P/CF looks attractive when compared to its industry's average P/CF of 8.98. Over the past year, UGP's P/CF has been as high as 8.20 and as low as 4.89, with a median of 6.56.

These figures are just a handful of the metrics value investors tend to look at, but they help show that Ultrapar Participacoes is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, UGP feels like a great value stock at the moment.

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