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Should Value Investors Buy Peabody Energy (BTU) Stock?
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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.
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 use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
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.
Peabody Energy (BTU - Free Report) is a stock many investors are watching right now. BTU is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A.
Another valuation metric that we should highlight is BTU's P/B ratio of 1.56. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. BTU's current P/B looks attractive when compared to its industry's average P/B of 1.71. BTU's P/B has been as high as 2.47 and as low as 0.75, with a median of 1.51, over the past year.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's 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. BTU has a P/S ratio of 0.85. This compares to its industry's average P/S of 1.05.
Finally, investors should note that BTU has a P/CF ratio of 3.11. 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 company's current P/CF looks solid when compared to its industry's average P/CF of 3.31. Within the past 12 months, BTU's P/CF has been as high as 6.99 and as low as 2.09, with a median of 3.28.
If you're looking for another solid Coal value stock, take a look at Warrior Met Coal (HCC - Free Report) . HCC is a # 2 (Buy) stock with a Value score of A.
Warrior Met Coal also has a P/B ratio of 1.39 compared to its industry's price-to-book ratio of 1.71. Over the past year, its P/B ratio has been as high as 2.52, as low as 1.08, with a median of 1.42.
Value investors will likely look at more than just these metrics, but the above data helps show that Peabody Energy and Warrior Met Coal are likely undervalued currently. And when considering the strength of its earnings outlook, BTU and HCC sticks out as one of the market's strongest value stocks.
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Should Value Investors Buy Peabody Energy (BTU) 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.
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 use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
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.
Peabody Energy (BTU - Free Report) is a stock many investors are watching right now. BTU is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A.
Another valuation metric that we should highlight is BTU's P/B ratio of 1.56. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. BTU's current P/B looks attractive when compared to its industry's average P/B of 1.71. BTU's P/B has been as high as 2.47 and as low as 0.75, with a median of 1.51, over the past year.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's 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. BTU has a P/S ratio of 0.85. This compares to its industry's average P/S of 1.05.
Finally, investors should note that BTU has a P/CF ratio of 3.11. 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 company's current P/CF looks solid when compared to its industry's average P/CF of 3.31. Within the past 12 months, BTU's P/CF has been as high as 6.99 and as low as 2.09, with a median of 3.28.
If you're looking for another solid Coal value stock, take a look at Warrior Met Coal (HCC - Free Report) . HCC is a # 2 (Buy) stock with a Value score of A.
Warrior Met Coal also has a P/B ratio of 1.39 compared to its industry's price-to-book ratio of 1.71. Over the past year, its P/B ratio has been as high as 2.52, as low as 1.08, with a median of 1.42.
Value investors will likely look at more than just these metrics, but the above data helps show that Peabody Energy and Warrior Met Coal are likely undervalued currently. And when considering the strength of its earnings outlook, BTU and HCC sticks out as one of the market's strongest value stocks.