Is Atlantic Power (AT) Stock Undervalued Right Now?

Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

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 fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

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 Atlantic Power (AT). AT is currently holding a Zacks Rank of #1 (Strong Buy) and a Value grade of A. The stock holds a P/E ratio of 7.92, while its industry has an average P/E of 15.37. Over the past 52 weeks, AT's Forward P/E has been as high as 23.94 and as low as 7.50, with a median of 9.46.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. AT has a P/S ratio of 0.7. This compares to its industry's average P/S of 1.82.

Finally, investors should note that AT has a P/CF ratio of 4.45. 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. AT's current P/CF looks attractive when compared to its industry's average P/CF of 7.58. Over the past year, AT's P/CF has been as high as 9.06 and as low as 2.35, with a median of 2.86.

These figures are just a handful of the metrics value investors tend to look at, but they help show that Atlantic Power is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, AT feels like a great value stock at the moment.

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