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Is EmbraerEmpresa Brasileira de Aeronautica (ERJ) 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.

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 EmbraerEmpresa Brasileira de Aeronautica (ERJ - Free Report) . ERJ 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 10.91 right now. For comparison, its industry sports an average P/E of 19.01. Over the past 52 weeks, ERJ's Forward P/E has been as high as 24.60 and as low as 10.45, with a median of 12.79.

We also note that ERJ holds a PEG ratio of 0.64. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. ERJ's industry currently sports an average PEG of 1.65. Within the past year, ERJ's PEG has been as high as 1.45 and as low as 0.61, with a median of 0.75.

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. ERJ has a P/S ratio of 0.51. This compares to its industry's average P/S of 1.19.

Value investors will likely look at more than just these metrics, but the above data helps show that EmbraerEmpresa Brasileira de Aeronautica is likely undervalued currently. And when considering the strength of its earnings outlook, ERJ sticks out at as one of the market's strongest value stocks.


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