Are Investors Undervaluing Cosan (CZZ) Right Now?

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.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.

One stock to keep an eye on is Cosan (CZZ). CZZ is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock is trading with a P/E ratio of 16.75, which compares to its industry's average of 22.65. Over the past 52 weeks, CZZ's Forward P/E has been as high as 20.95 and as low as 11.94, with a median of 14.23.

We also note that CZZ holds a PEG ratio of 1.05. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. CZZ's PEG compares to its industry's average PEG of 1.42. Over the last 12 months, CZZ's PEG has been as high as 1.32 and as low as 0.76, with a median of 0.83.

We should also highlight that CZZ has a P/B ratio of 1.32. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. This stock's P/B looks solid versus its industry's average P/B of 1.66. Over the past year, CZZ's P/B has been as high as 1.37 and as low as 0.52, with a median of 0.81.

Finally, investors should note that CZZ has a P/CF ratio of 4.94. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 15.05. Over the past 52 weeks, CZZ's P/CF has been as high as 5.13 and as low as 2.88, with a median of 3.51.

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

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