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Is Alcoa (AA) a Great Value Stock Right Now?

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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.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

One company value investors might notice is Alcoa (AA - Free Report) . AA is currently holding a Zacks Rank of #1 (Strong Buy) and a Value grade of A. The stock has a Forward P/E ratio of 9.83. This compares to its industry's average Forward P/E of 9.91. Over the last 12 months, AA's Forward P/E has been as high as 17.41 and as low as 9.17, with a median of 12.44.

Another valuation metric that we should highlight is AA's P/B ratio of 1.08. 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. This company's current P/B looks solid when compared to its industry's average P/B of 1.27. Over the past year, AA's P/B has been as high as 1.55 and as low as 0.93, with a median of 1.18.

Finally, our model also underscores that AA has a P/CF ratio of 8.53. 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. AA's P/CF compares to its industry's average P/CF of 8.85. Within the past 12 months, AA's P/CF has been as high as 12.49 and as low as 7.35, with a median of 9.11.

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




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