Back to top

Image: Bigstock

Are Investors Undervaluing Atlantic Power (AT) Right Now?

Read MoreHide Full Article

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

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

Atlantic Power (AT - Free Report) is a stock many investors are watching right now. AT is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock holds a P/E ratio of 9.66, while its industry has an average P/E of 13.68. Over the past year, AT's Forward P/E has been as high as 25.08 and as low as -30.13, with a median of 4.90.

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. AT has a P/S ratio of 0.98. This compares to its industry's average P/S of 2.14.

Finally, we should also recognize that AT has a P/CF ratio of 3.14. 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. This stock's P/CF looks attractive against its industry's average P/CF of 8.48. Over the past year, AT's P/CF has been as high as 5.40 and as low as 2.35, with a median of 3.15.

Value investors will likely look at more than just these metrics, but the above data helps show that Atlantic Power is likely undervalued currently. And when considering the strength of its earnings outlook, AT sticks out at as one of the market's strongest value stocks.

In-Depth Zacks Research for the Tickers Above

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

Atlantic Power Corporation (AT) - free report >>

Published in