Back to top

Image: Bigstock

Is Sappi (SPPJY) a Great Value Stock Right Now?

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.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. 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.

Sappi (SPPJY - Free Report) is a stock many investors are watching right now. SPPJY is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock holds a P/E ratio of 6.75, while its industry has an average P/E of 10.38. Over the past year, SPPJY's Forward P/E has been as high as 9.72 and as low as 5, with a median of 7.28.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. SPPJY has a P/S ratio of 0.24. This compares to its industry's average P/S of 0.52.

Finally, investors will want to recognize that SPPJY has a P/CF ratio of 2.52. 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. This company's current P/CF looks solid when compared to its industry's average P/CF of 5.05. Within the past 12 months, SPPJY's P/CF has been as high as 2.82 and as low as 1.51, with a median of 2.17.

Another great Paper and Related Products stock you could consider is Suzano (SUZ - Free Report) , which is a # 1 (Strong Buy) stock with a Value Score of A.

Suzano is currently trading with a Forward P/E ratio of 6.47 while its PEG ratio sits at 0.69. Both of the company's metrics compare favorably to its industry's average P/E of 10.38 and average PEG ratio of 1.10.

Over the last 12 months, SUZ's P/E has been as high as 7.71, as low as 4.32, with a median of 5.74, and its PEG ratio has been as high as 1.08, as low as 0.55, with a median of 0.79.

Additionally, Suzano has a P/B ratio of 1.70 while its industry's price-to-book ratio sits at 2.15. For SUZ, this valuation metric has been as high as 1.97, as low as 1.39, with a median of 1.68 over the past year.

Value investors will likely look at more than just these metrics, but the above data helps show that Sappi and Suzano are likely undervalued currently. And when considering the strength of its earnings outlook, SPPJY and SUZ sticks out as one of the market's strongest value stocks.

See More Zacks Research for These Tickers

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

Sappi Ltd. (SPPJY) - free report >>

Suzano S.A. Sponsored ADR (SUZ) - free report >>

Published in