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Is Methanex (MEOH) Stock Undervalued Right Now?

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While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.

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 fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.

One company value investors might notice is Methanex (MEOH - Free Report) . MEOH is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A.

We also note that MEOH holds a PEG ratio of 1.18. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. MEOH's industry currently sports an average PEG of 2.65. Within the past year, MEOH's PEG has been as high as 2.83 and as low as 0.83, with a median of 1.14.

We should also highlight that MEOH has a P/B ratio of 1.37. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. MEOH's current P/B looks attractive when compared to its industry's average P/B of 1.70. Within the past 52 weeks, MEOH's P/B has been as high as 1.89 and as low as 0.45, with a median of 1.11.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. MEOH has a P/S ratio of 0.82. This compares to its industry's average P/S of 0.95.

Finally, our model also underscores that MEOH has a P/CF ratio of 6.91. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 11.73. Within the past 12 months, MEOH's P/CF has been as high as 7.13 and as low as 1.69, with a median of 5.01.

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


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