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Are Investors Undervaluing KNOT Offshore Partners (KNOP) 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 tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
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 KNOT Offshore Partners (KNOP - Free Report) . KNOP is currently sporting a Zacks Rank of #1 (Strong Buy) and an A for Value.
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. KNOP has a P/S ratio of 0.7. This compares to its industry's average P/S of 1.47.
Finally, our model also underscores that KNOP has a P/CF ratio of 2.38. 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 stock's P/CF looks attractive against its industry's average P/CF of 6.54. Over the past year, KNOP's P/CF has been as high as 2.75 and as low as 1.16, with a median of 2.18.
These are only a few of the key metrics included in KNOT Offshore Partners'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, KNOP looks like an impressive value stock at the moment.