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Is Summit Materials (SUM) 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.

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

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.

Summit Materials (SUM - Free Report) is a stock many investors are watching right now. SUM is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value.

Another valuation metric that we should highlight is SUM's P/B ratio of 2.03. Investors use the P/B ratio to look at a stock's market value versus 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 4.56. Within the past 52 weeks, SUM's P/B has been as high as 2.76 and as low as 1.85, with a median of 2.33.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. SUM has a P/S ratio of 1.36. This compares to its industry's average P/S of 1.78.

Finally, investors should note that SUM has a P/CF ratio of 9.65. 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 company's current P/CF looks solid when compared to its industry's average P/CF of 23.35. SUM's P/CF has been as high as 12.78 and as low as 8.20, with a median of 10.21, all within the past year.

These are only a few of the key metrics included in Summit Materials's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, SUM looks like an impressive value stock at the moment.


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