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Is AK Steel (AKS) Stock Undervalued Right Now?

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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.

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 AK Steel (AKS - Free Report) . AKS is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock has a Forward P/E ratio of 5.52. This compares to its industry's average Forward P/E of 6.99. AKS's Forward P/E has been as high as 10.56 and as low as 2.80, with a median of 5.21, all within the past year.

Another valuation metric that we should highlight is AKS's P/B ratio of 2.15. 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. AKS's current P/B looks attractive when compared to its industry's average P/B of 2.30. Over the past year, AKS's P/B has been as high as 14.53 and as low as 1.56, with a median of 3.85.

Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. AKS has a P/S ratio of 0.13. This compares to its industry's average P/S of 0.35.

These figures are just a handful of the metrics value investors tend to look at, but they help show that AK Steel is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, AKS feels like a great value stock at the moment.




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