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Is Peabody Energy (BTU) Stock Undervalued 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.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

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

Investors should also recognize that BTU has a P/B ratio of 1.70. The P/B is a method of comparing a stock's market value to 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 1.86. Over the past year, BTU's P/B has been as high as 2.47 and as low as 0.70, with a median of 1.42.

Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. BTU has a P/S ratio of 0.96. This compares to its industry's average P/S of 0.99.

Finally, we should also recognize that BTU has a P/CF ratio of 4.09. 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. BTU's P/CF compares to its industry's average P/CF of 4.75. BTU's P/CF has been as high as 110.47 and as low as 1.97, with a median of 4.56, all within the past year.

Investors could also keep in mind Warrior Met Coal (HCC - Free Report) , an Coal stock with a Zacks Rank of # 2 (Buy) and Value grade of A.

Furthermore, Warrior Met Coal holds a P/B ratio of 1.32 and its industry's price-to-book ratio is 1.86. HCC's P/B has been as high as 2.52, as low as 1.08, with a median of 1.63 over the past 12 months.

Value investors will likely look at more than just these metrics, but the above data helps show that Peabody Energy and Warrior Met Coal are likely undervalued currently. And when considering the strength of its earnings outlook, BTU and HCC sticks out as one of the market's strongest value stocks.


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