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Is Posco (PKX) Stock Undervalued Right Now?

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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 rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

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.

Posco (PKX - Free Report) is a stock many investors are watching right now. PKX is currently sporting a Zacks Rank of #1 (Strong Buy), as well as a Value grade of A.

PKX is also sporting a PEG ratio of 2.06. 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. PKX's industry currently sports an average PEG of 4.26. Over the last 12 months, PKX's PEG has been as high as 2.15 and as low as 1.39, with a median of 1.76.

Another valuation metric that we should highlight is PKX's P/B ratio of 0.61. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. This company's current P/B looks solid when compared to its industry's average P/B of 0.91. Within the past 52 weeks, PKX's P/B has been as high as 0.64 and as low as 0.24, with a median of 0.38.

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. PKX has a P/S ratio of 0.48. This compares to its industry's average P/S of 0.64.

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


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