Back to top

Image: Bigstock

Are Investors Undervaluing Avnet (AVT) Right Now?

Read MoreHide Full Article

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.

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 stock to keep an eye on is Avnet (AVT - Free Report) . AVT is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock is trading with a P/E ratio of 8.46, which compares to its industry's average of 9.08. Over the last 12 months, AVT's Forward P/E has been as high as 17.28 and as low as 7.40, with a median of 12.04.

Investors should also note that AVT holds a PEG ratio of 0.31. 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. AVT's PEG compares to its industry's average PEG of 0.39. Over the last 12 months, AVT's PEG has been as high as 0.91 and as low as 0.27, with a median of 0.53.

Investors should also recognize that AVT has a P/B ratio of 0.99. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. AVT's current P/B looks attractive when compared to its industry's average P/B of 1.58. Within the past 52 weeks, AVT's P/B has been as high as 1.13 and as low as 0.86, with a median of 0.98.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's 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. AVT has a P/S ratio of 0.2. This compares to its industry's average P/S of 0.33.

Finally, investors should note that AVT has a P/CF ratio of 8.16. 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. This company's current P/CF looks solid when compared to its industry's average P/CF of 12.90. AVT's P/CF has been as high as 14.24 and as low as 7.13, with a median of 10.60, all within the past year.

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

In-Depth Zacks Research for the Tickers Above

Normally $25 each - click below to receive one report FREE:

Avnet, Inc. (AVT) - free report >>

Published in