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Are Investors Undervaluing AES (AES) Right Now?

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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.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

One stock to keep an eye on is AES (AES - Free Report) . AES is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock holds a P/E ratio of 8.22, while its industry has an average P/E of 13.96. Over the last 12 months, AES's Forward P/E has been as high as 11.23 and as low as 6.60, with a median of 8.93.

Investors will also notice that AES has a PEG ratio of 1.06. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. AES's PEG compares to its industry's average PEG of 1.89. Within the past year, AES's PEG has been as high as 1.39 and as low as 0.72, with a median of 0.96.

Investors should also recognize that AES has a P/B ratio of 1.67. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. This company's current P/B looks solid when compared to its industry's average P/B of 2.50. AES's P/B has been as high as 3.36 and as low as 1.65, with a median of 2.23, 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. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. AES has a P/S ratio of 0.94. This compares to its industry's average P/S of 1.92.

Finally, investors will want to recognize that AES has a P/CF ratio of 6.03. 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. AES's P/CF compares to its industry's average P/CF of 12.12. Within the past 12 months, AES's P/CF has been as high as 25.46 and as low as 5.95, with a median of 8.60.

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


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