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Are Investors Undervaluing Methanex (MEOH) 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.

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 use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

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.

Methanex (MEOH - Free Report) is a stock many investors are watching right now. MEOH is currently sporting a Zacks Rank of #1 (Strong Buy), as well as an A grade for Value. The stock is trading with P/E ratio of 6.59 right now. For comparison, its industry sports an average P/E of 10.02. Over the last 12 months, MEOH's Forward P/E has been as high as 14.14 and as low as 6.53, with a median of 9.83.

Investors should also recognize that MEOH has a P/B ratio of 1.40. 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. This stock's P/B looks attractive against its industry's average P/B of 2.09. Within the past 52 weeks, MEOH's P/B has been as high as 2.15 and as low as 1.34, with a median of 1.71.

Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. 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 0.71. This compares to its industry's average P/S of 0.76.

Finally, we should also recognize that MEOH has a P/CF ratio of 3.84. 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 6.58. MEOH's P/CF has been as high as 9.80 and as low as 3.55, with a median of 5.04, all within the past year.

These are only a few of the key metrics included in Methanex'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, MEOH looks like an impressive value stock at the moment.


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