Back to top

Image: Bigstock

Are Investors Undervaluing Amerigo Resources (ARREF) 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.

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 tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

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 stock to keep an eye on is Amerigo Resources . ARREF is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A.

Another valuation metric that we should highlight is ARREF's P/B ratio of 1.38. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. ARREF's current P/B looks attractive when compared to its industry's average P/B of 1.52. Within the past 52 weeks, ARREF's P/B has been as high as 1.53 and as low as 0.93, with a median of 1.22.

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. ARREF has a P/S ratio of 1.03. This compares to its industry's average P/S of 1.3.

Finally, investors should note that ARREF has a P/CF ratio of 5.54. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. ARREF's P/CF compares to its industry's average P/CF of 6.83. Within the past 12 months, ARREF's P/CF has been as high as 6.21 and as low as 3.35, with a median of 5.34.

These are only a few of the key metrics included in Amerigo Resources'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, ARREF looks like an impressive value stock at the moment.

Published in