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Should Value Investors Buy Covenant Logistics (CVLG) Stock?

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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, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

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.

One company to watch right now is Covenant Logistics (CVLG - Free Report) . CVLG is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock is trading with a P/E ratio of 7.99, which compares to its industry's average of 20.89. Over the past 52 weeks, CVLG's Forward P/E has been as high as 13.23 and as low as 6.18, with a median of 8.81.

Another notable valuation metric for CVLG is its P/B ratio of 1.49. 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 3.97. Over the past year, CVLG's P/B has been as high as 1.56 and as low as 0.74, 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. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. CVLG has a P/S ratio of 0.51. This compares to its industry's average P/S of 1.32.

Finally, investors should note that CVLG has a P/CF ratio of 7.35. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 16.07. Within the past 12 months, CVLG's P/CF has been as high as 15.81 and as low as 4.31, with a median of 7.55.

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


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