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Should Value Investors Buy Covenant Transportation (CVTI) 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 a variety of methods, including tried-and-true valuation metrics, to find these stocks.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

One company value investors might notice is Covenant Transportation (CVTI - Free Report) . CVTI is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock is trading with P/E ratio of 12.71 right now. For comparison, its industry sports an average P/E of 18.10. CVTI's Forward P/E has been as high as 31.88 and as low as 11.78, with a median of 15.88, all within the past year.

Investors should also recognize that CVTI has a P/B ratio of 1.83. 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. This stock's P/B looks attractive against its industry's average P/B of 2.87. Within the past 52 weeks, CVTI's P/B has been as high as 2.24 and as low as 1.58, with a median of 1.85.

Finally, investors should note that CVTI has a P/CF ratio of 4.11. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. CVTI's current P/CF looks attractive when compared to its industry's average P/CF of 10.87. Within the past 12 months, CVTI's P/CF has been as high as 6.39 and as low as 3.66, with a median of 4.24.

These are just a handful of the figures considered in Covenant Transportation's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that CVTI is an impressive value stock right now.




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