Yahoo Finance Are Investors Undervaluing TransAlta (TAC) Right Now?
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, 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 fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
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 to watch right now is TransAlta (TAC). TAC is currently sporting a Zacks Rank of #2 (Buy) and an A for Value.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. TAC has a P/S ratio of 0.82. This compares to its industry's average P/S of 1.75.
Finally, investors will want to recognize that TAC has a P/CF ratio of 2.16. 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. TAC's P/CF compares to its industry's average P/CF of 8.32. TAC's P/CF has been as high as 4.42 and as low as 1.91, with a median of 2.37, all within the past year.
These are just a handful of the figures considered in TransAlta's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that TAC is an impressive value stock right now.
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TransAlta Corporation (TAC) : Free Stock Analysis Report
