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Are Investors Undervaluing Constellium (CSTM) Right Now?

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The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find 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 fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

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.

One company to watch right now is Constellium (CSTM - Free Report) . CSTM is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock is trading with a P/E ratio of 10.08, which compares to its industry's average of 17.79. Over the past year, CSTM's Forward P/E has been as high as 17.59 and as low as 8.20, with a median of 10.13.

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. CSTM has a P/S ratio of 0.37. This compares to its industry's average P/S of 0.45.

Finally, our model also underscores that CSTM has a P/CF ratio of 6.60. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 21.53. Over the past 52 weeks, CSTM's P/CF has been as high as 6.60 and as low as 3.26, with a median of 5.17.

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


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