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Is Braskem S.A. (BAK) a Great Stock for Value Investors?
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Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Braskem S.A. (BAK - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current ratio with: a) where this ratio has been in the past; b) how does it compare to the average for the industry/sector; and c) how does it compare to the market as a whole.
On this front, Braskem has a trailing twelve months PE ratio of 8.05. This level actually compares pretty favorably with the market at large, as the PE ratio for the S&P 500 compares in at about 19.91.
This level puts Braskem’s current PE ratio above its midpoint (which is 5.76) over the past five years.
Further, the stock’s PE also compares favorably with the broader Oils-Energy sector’s trailing twelve months PE ratio, which stands at 74.12. This indicates that the stock is significantly undervalued right now, compared to its peers. The chart below depicts both the stock’s PE trend over the past five years, and its comparison with the sector PE:
We should also point out that Braskem has a forward PE of a little less – 6.09 – so it is fair to say that a slightly more value-oriented path may be ahead for Braskem stock in the near term too. We define forward PE as current price relative to the Zacks Consensus Estimate for the current fiscal year.
PS Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Braskem has a P/S ratio of about 0.57. This compares favorably with the S&P 500 average, which stands at 2.85 right now. However, as we can see in the chart below, this is well above the highs for this stock in particular over the past few years.
BAK is actually in the higher zone of its trading range in the time period per the P/S metric, which suggests that the company’s stock price has already appreciated to some degree, relative to its sales.
Broad Value Outlook
In aggregate, Braskem currently has a Zacks Value Style Score of ‘A’, putting it into the top 20% of all stocks we cover from this look. This makes Braskem a solid choice for value investors, and some of its other key metrics make this pretty clear too. For example, its P/CF ratio (another great indicator of value) comes in at 3.95, which is better than the industry average of 4.14. Clearly, BAK is a solid choice on the value front from multiple angles.
What about the Stock Overall?
Though Braskem might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘A’ and a Momentum score of ‘B’. This gives BAK a Zacks VGM score—or its overarching fundamental grade—of ‘A’. (You can read more about the Zacks Style Scores here >>)
Our VGM Score identifies stocks that have the most attractive value, growth, and momentum characteristics, and a good VGM score can increase your odds of success. All things considered, Braskem seems to have pretty striking prospects.
Meanwhile, the company’s recent earnings estimates have been encouraging. The current quarter has seen one estimate go higher in the past 30 days compared to none lower, while the full year estimate has also seen one upward revision and none down in the same time period.
This has had a meaningful impact on the consensus estimate though, as the current quarter consensus estimate has risen by 9.1% in the past month, while the full year estimate has gone higher by just 1.5%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
This bullish trend is why the stock boasts a Zacks Rank #1 (Strong Buy) and why we are expecting outperformance from the company in the near term.
Bottom Line
Braskem is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Boasting a good industry rank and a top Zacks Rank, the company deserves attention right now. So, it might pay for value investors to delve deeper into the company’s prospects, as fundamentals indicate that this stock could be a compelling pick.
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Is Braskem S.A. (BAK) a Great Stock for Value Investors?
Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Braskem S.A. (BAK - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current ratio with: a) where this ratio has been in the past; b) how does it compare to the average for the industry/sector; and c) how does it compare to the market as a whole.
On this front, Braskem has a trailing twelve months PE ratio of 8.05. This level actually compares pretty favorably with the market at large, as the PE ratio for the S&P 500 compares in at about 19.91.
This level puts Braskem’s current PE ratio above its midpoint (which is 5.76) over the past five years.
BRASKEM SA PE Ratio (TTM)
BRASKEM SA PE Ratio (TTM) | BRASKEM SA Quote
Further, the stock’s PE also compares favorably with the broader Oils-Energy sector’s trailing twelve months PE ratio, which stands at 74.12. This indicates that the stock is significantly undervalued right now, compared to its peers. The chart below depicts both the stock’s PE trend over the past five years, and its comparison with the sector PE:
We should also point out that Braskem has a forward PE of a little less – 6.09 – so it is fair to say that a slightly more value-oriented path may be ahead for Braskem stock in the near term too. We define forward PE as current price relative to the Zacks Consensus Estimate for the current fiscal year.
PS Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Braskem has a P/S ratio of about 0.57. This compares favorably with the S&P 500 average, which stands at 2.85 right now. However, as we can see in the chart below, this is well above the highs for this stock in particular over the past few years.
BAK is actually in the higher zone of its trading range in the time period per the P/S metric, which suggests that the company’s stock price has already appreciated to some degree, relative to its sales.
Broad Value Outlook
In aggregate, Braskem currently has a Zacks Value Style Score of ‘A’, putting it into the top 20% of all stocks we cover from this look. This makes Braskem a solid choice for value investors, and some of its other key metrics make this pretty clear too. For example, its P/CF ratio (another great indicator of value) comes in at 3.95, which is better than the industry average of 4.14. Clearly, BAK is a solid choice on the value front from multiple angles.
What about the Stock Overall?
Though Braskem might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘A’ and a Momentum score of ‘B’. This gives BAK a Zacks VGM score—or its overarching fundamental grade—of ‘A’. (You can read more about the Zacks Style Scores here >>)
Our VGM Score identifies stocks that have the most attractive value, growth, and momentum characteristics, and a good VGM score can increase your odds of success. All things considered, Braskem seems to have pretty striking prospects.
Meanwhile, the company’s recent earnings estimates have been encouraging. The current quarter has seen one estimate go higher in the past 30 days compared to none lower, while the full year estimate has also seen one upward revision and none down in the same time period.
This has had a meaningful impact on the consensus estimate though, as the current quarter consensus estimate has risen by 9.1% in the past month, while the full year estimate has gone higher by just 1.5%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
BRASKEM SA Price and Consensus
BRASKEM SA Price and Consensus | BRASKEM SA Quote
This bullish trend is why the stock boasts a Zacks Rank #1 (Strong Buy) and why we are expecting outperformance from the company in the near term.
Bottom Line
Braskem is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Boasting a good industry rank and a top Zacks Rank, the company deserves attention right now. So, it might pay for value investors to delve deeper into the company’s prospects, as fundamentals indicate that this stock could be a compelling pick.