Back to top

Is China Eastern (CEA) a Great Value Stock Right Now?

Read MoreHide Full Article

While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. 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.

One company to watch right now is China Eastern (CEA - Free Report) . CEA is currently sporting a Zacks Rank of #1 (Strong Buy) and an A for Value.

Another notable valuation metric for CEA is its P/B ratio of 1. The P/B ratio pits a stock's market value against 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 2.57. Over the past 12 months, CEA's P/B has been as high as 1.50 and as low as 0.81, with a median of 0.98.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. CEA has a P/S ratio of 0.54. This compares to its industry's average P/S of 0.74.

Finally, we should also recognize that CEA has a P/CF ratio of 3.68. 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. CEA's current P/CF looks attractive when compared to its industry's average P/CF of 6.12. CEA's P/CF has been as high as 4.38 and as low as 2.66, with a median of 3.55, all within the past year.

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




In-Depth Zacks Research for the Tickers Above


Normally $25 each - click below to receive one report FREE:


China Eastern Airlines Corporation Ltd. (CEA) - free report >>

More from Zacks Tale of the Tape

You May Like

Published in