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Embraer-Empresa Brasileira de Aeronautica (ERJ) - free report >>
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Embraer-Empresa Brasileira de Aeronautica (ERJ) - free report >>
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Should Value Investors Buy EmbraerEmpresa Brasileira de Aeronautica (ERJ) Stock?
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.
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 EmbraerEmpresa Brasileira de Aeronautica (ERJ - Free Report) . ERJ is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock is trading with a P/E ratio of 14.91, which compares to its industry's average of 22.26. Over the past year, ERJ's Forward P/E has been as high as 72.57 and as low as 11.39, with a median of 24.46.
ERJ is also sporting a PEG ratio of 0.88. 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. ERJ's industry has an average PEG of 1.95 right now. Over the last 12 months, ERJ's PEG has been as high as 4.27 and as low as 0.67, with a median of 1.44.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. ERJ has a P/S ratio of 0.6. This compares to its industry's average P/S of 1.67.
These figures are just a handful of the metrics value investors tend to look at, but they help show that EmbraerEmpresa Brasileira de Aeronautica is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, ERJ feels like a great value stock at the moment.