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Are Investors Undervaluing AES (AES) Right Now?

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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, 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.

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.

One stock to keep an eye on is AES (AES - Free Report) . AES is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock is trading with P/E ratio of 11.21 right now. For comparison, its industry sports an average P/E of 14.24. Over the past year, AES's Forward P/E has been as high as 13.65 and as low as 10.41, with a median of 11.92.

We also note that AES holds a PEG ratio of 1.32. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. AES's industry has an average PEG of 2.34 right now. AES's PEG has been as high as 1.75 and as low as 1.18, with a median of 1.42, all within the past year.

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. AES has a P/S ratio of 0.97. This compares to its industry's average P/S of 2.3.

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


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