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Is NeoPhotonics (NPTN) Stock Undervalued Right Now?

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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 rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

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 value investors might notice is NeoPhotonics (NPTN - Free Report) . NPTN is currently holding a Zacks Rank of #1 (Strong Buy) and a Value grade of A.

Investors should also recognize that NPTN has a P/B ratio of 2.23. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. NPTN's current P/B looks attractive when compared to its industry's average P/B of 2.53. Over the past 12 months, NPTN's P/B has been as high as 2.84 and as low as 1.08, with a median of 2.02.

Finally, we should also recognize that NPTN has a P/CF ratio of 11.37. 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. This stock's P/CF looks attractive against its industry's average P/CF of 36.53. Within the past 12 months, NPTN's P/CF has been as high as 58.51 and as low as -114.40, with a median of 14.47.

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


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