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Should Value Investors Buy AZZ (AZZ) Stock?

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Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

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 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 AZZ (AZZ - Free Report) . AZZ is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock holds a P/E ratio of 15.81, while its industry has an average P/E of 24.20. Over the past year, AZZ's Forward P/E has been as high as 15.84 and as low as 9.48, with a median of 11.36.

AZZ is also sporting a PEG ratio of 1.13. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. AZZ's PEG compares to its industry's average PEG of 2.08. Over the past 52 weeks, AZZ's PEG has been as high as 1.13 and as low as 0.89, with a median of 0.94.

Another notable valuation metric for AZZ is its P/B ratio of 1.97. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. AZZ's current P/B looks attractive when compared to its industry's average P/B of 3.43. Within the past 52 weeks, AZZ's P/B has been as high as 1.97 and as low as 1, with a median of 1.28.

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. AZZ has a P/S ratio of 1.2. This compares to its industry's average P/S of 2.65.

These figures are just a handful of the metrics value investors tend to look at, but they help show that AZZ is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, AZZ feels like a great value stock at the moment.


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