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Are Investors Undervaluing Centrais Eltricas Brasileiras (EBR) 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.

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.

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 company to watch right now is Centrais Eltricas Brasileiras (EBR - Free Report) . EBR is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock is trading with P/E ratio of 9.05 right now. For comparison, its industry sports an average P/E of 15.21. Over the past 52 weeks, EBR's Forward P/E has been as high as 20.56 and as low as 6.81, with a median of 9.89.

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 prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. EBR has a P/S ratio of 1.76. This compares to its industry's average P/S of 2.11.

Finally, investors should note that EBR has a P/CF ratio of 7.36. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. EBR's current P/CF looks attractive when compared to its industry's average P/CF of 12.41. Within the past 12 months, EBR's P/CF has been as high as 8.32 and as low as 4.54, with a median of 6.18.

If you're looking for another solid Utility - Electric Power value stock, take a look at RWE AG (RWEOY - Free Report) . RWEOY is a # 2 (Buy) stock with a Value score of A.

Shares of RWE AG currently holds a Forward P/E ratio of 11.93, and its PEG ratio is 2.67. In comparison, its industry sports average P/E and PEG ratios of 15.21 and 2.12.

RWEOY's price-to-earnings ratio has been as high as 20.53 and as low as 11.14, with a median of 17.90, while its PEG ratio has been as high as 4.53 and as low as 2.50, with a median of 3.92, all within the past year.

RWE AG sports a P/B ratio of 2.15 as well; this compares to its industry's price-to-book ratio of 2.47. In the past 52 weeks, RWEOY's P/B has been as high as 2.48, as low as 0.88, with a median of 1.30.

These are only a few of the key metrics included in Centrais Eltricas Brasileiras and RWE AG strong Value grade, but they help show that the stocks are likely undervalued right now. When factoring in the strength of its earnings outlook, EBR and RWEOY look like an impressive value stock at the moment.


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