Back to top

Image: Bigstock

Should Value Investors Buy Koppers (KOP) Stock?

Read MoreHide Full Article

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.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

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.

One company value investors might notice is Koppers (KOP - Free Report) . KOP is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock has a Forward P/E ratio of 5.53. This compares to its industry's average Forward P/E of 11.48. Over the last 12 months, KOP's Forward P/E has been as high as 8.05 and as low as 4.57, with a median of 6.02.

Another valuation metric that we should highlight is KOP's P/B ratio of 1.38. 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 2.08. Over the past 12 months, KOP's P/B has been as high as 1.97 and as low as 1.10, with a median of 1.37.

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. KOP has a P/S ratio of 0.29. This compares to its industry's average P/S of 0.58.

Finally, we should also recognize that KOP has a P/CF ratio of 4.49. 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. KOP's P/CF compares to its industry's average P/CF of 6.51. KOP's P/CF has been as high as 5.83 and as low as 3.56, with a median of 4.34, all within the past year.

Another great Chemical - Diversified stock you could consider is Methanex (MEOH - Free Report) , which is a # 2 (Buy) stock with a Value Score of A.

Methanex sports a P/B ratio of 0.99 as well; this compares to its industry's price-to-book ratio of 2.08. In the past 52 weeks, MEOH's P/B has been as high as 2.15, as low as 0.86, with a median of 1.60.

These are only a few of the key metrics included in Koppers and Methanex strong Value grade, but they help show that the stocks are likely undervalued right now. When factoring in the strength of its earnings outlook, KOP and MEOH look like an impressive value stock at the moment.


See More Zacks Research for These Tickers


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


Methanex Corporation (MEOH) - free report >>

Koppers Holdings Inc. (KOP) - free report >>

Published in