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Should Value Investors Buy Kemet (KEM) Stock?

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Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

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.

Kemet (KEM - Free Report) is a stock many investors are watching right now. KEM is currently holding a Zacks Rank of #1 (Strong Buy) and a Value grade of A. The stock is trading with a P/E ratio of 5.17, which compares to its industry's average of 14.56. Over the past 52 weeks, KEM's Forward P/E has been as high as 15.47 and as low as 5.15, with a median of 9.98.

Another valuation metric that we should highlight is KEM's P/B ratio of 2.11. 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. KEM's current P/B looks attractive when compared to its industry's average P/B of 2.36. Over the past 12 months, KEM's P/B has been as high as 3.62 and as low as 1.63, with a median of 2.35.

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. KEM has a P/S ratio of 0.85. This compares to its industry's average P/S of 1.29.

Finally, our model also underscores that KEM has a P/CF ratio of 7.77. 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. KEM's P/CF compares to its industry's average P/CF of 9.74. Over the past 52 weeks, KEM's P/CF has been as high as 14.64 and as low as 2.42, with a median of 3.78.

These are only a few of the key metrics included in Kemet's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, KEM looks like an impressive value stock at the moment.




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