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Are Investors Undervaluing Alpha Metallurgical Resources (AMR) Right Now?

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Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

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 to watch right now is Alpha Metallurgical Resources (AMR - Free Report) . AMR 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 7.95 right now. For comparison, its industry sports an average P/E of 11.33. Over the past year, AMR's Forward P/E has been as high as 11.01 and as low as 1.75, with a median of 4.74.

Another notable valuation metric for AMR is its P/B ratio of 2.36. 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. AMR's current P/B looks attractive when compared to its industry's average P/B of 5.60. Over the past year, AMR's P/B has been as high as 2.46 and as low as 1.31, with a median of 1.79.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. AMR has a P/S ratio of 1.11. This compares to its industry's average P/S of 1.74.

These are only a few of the key metrics included in Alpha Metallurgical Resources'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, AMR looks like an impressive value stock at the moment.


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