Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put CAI International, Inc. stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, CAI International has a trailing twelve months PE ratio of 6.6, as you can see in the chart below:
This level actually compares quite favorably with the market at large, as the PE for the S&P 500 stands at about 18.28. Also, if we focus on the long-term PE trend, CAI International’s current PE level puts it below its midpoint of 7.02 over the past five years.
The stock’s PE also compares quite favorably with the Transportation Market’s trailing twelve months PE ratio, which stands at 15.74. This indicates that the stock is quite undervalued right now, compared to its peers.
Moreover, CAI International has a forward PE ratio (price relative to this year’s earnings) of 6.43, which is slightly lower than the current level. So, it is fair to say that a slightly more value-oriented path may be ahead for CAI International stock in the near term too.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, CAI International has a P/S ratio of just 1.03. This is quite lower than the S&P 500 average, which comes in at 3.31x right now. Also, as we can see in the chart below, this is below the highs for this stock in particular over the past few years.
Broad Value Outlook
In aggregate, CAI International currently has a Value Score of A, putting it into the top 20% of all stocks we cover from this look. This makes CAI International a solid choice for value investors.
What About the Stock Overall?
Though CAI International might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth Score of B and a Momentum Score of D. This gives CAI a Zacks VGM score — or its overarching fundamental grade — of A. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been discouraging. The current quarter has seen no upward revisions versus two downward revisions over the past sixty days, while the current-year estimates have seen one upward revision and two downward revisions in the past sixty days.
This has had a negative impact on the consensus estimate as the current-quarter consensus estimate which dipped 7.3% over the past two months, while the current-year estimate has decreased 5.5%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Such bearish analyst sentiments is the reason why the stock has a Zacks Rank #3 (Hold) and it is the reason why we are looking for in-line performance from the company in the near term.
Bottom Line
CAI International is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. However, despite a strong industry rank (among Top 13% of more than 250 industries), with a Zacks Rank #3, it is too hard to get excited about the stock.
Also, over the past two years, the broader industry has clearly underperformed the market at large, as you can see below:
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Thus, investors might want to wait for the estimates and Zacks Rank to turn around, but once that happens, the stock will be a compelling pick.
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Can Value Investors Consider CAI International (CAI) Stock?
Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put CAI International, Inc. stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, CAI International has a trailing twelve months PE ratio of 6.6, as you can see in the chart below:
This level actually compares quite favorably with the market at large, as the PE for the S&P 500 stands at about 18.28. Also, if we focus on the long-term PE trend, CAI International’s current PE level puts it below its midpoint of 7.02 over the past five years.
The stock’s PE also compares quite favorably with the Transportation Market’s trailing twelve months PE ratio, which stands at 15.74. This indicates that the stock is quite undervalued right now, compared to its peers.
Moreover, CAI International has a forward PE ratio (price relative to this year’s earnings) of 6.43, which is slightly lower than the current level. So, it is fair to say that a slightly more value-oriented path may be ahead for CAI International stock in the near term too.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, CAI International has a P/S ratio of just 1.03. This is quite lower than the S&P 500 average, which comes in at 3.31x right now. Also, as we can see in the chart below, this is below the highs for this stock in particular over the past few years.
Broad Value Outlook
In aggregate, CAI International currently has a Value Score of A, putting it into the top 20% of all stocks we cover from this look. This makes CAI International a solid choice for value investors.
What About the Stock Overall?
Though CAI International might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth Score of B and a Momentum Score of D. This gives CAI a Zacks VGM score — or its overarching fundamental grade — of A. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been discouraging. The current quarter has seen no upward revisions versus two downward revisions over the past sixty days, while the current-year estimates have seen one upward revision and two downward revisions in the past sixty days.
This has had a negative impact on the consensus estimate as the current-quarter consensus estimate which dipped 7.3% over the past two months, while the current-year estimate has decreased 5.5%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
CAI International, Inc. Price and Consensus
CAI International, Inc. price-consensus-chart | CAI International, Inc. Quote
Such bearish analyst sentiments is the reason why the stock has a Zacks Rank #3 (Hold) and it is the reason why we are looking for in-line performance from the company in the near term.
Bottom Line
CAI International is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. However, despite a strong industry rank (among Top 13% of more than 250 industries), with a Zacks Rank #3, it is too hard to get excited about the stock.
Also, over the past two years, the broader industry has clearly underperformed the market at large, as you can see below:
Thus, investors might want to wait for the estimates and Zacks Rank to turn around, but once that happens, the stock will be a compelling pick.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Click here for the 6 trades >>