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Is Trinseo (TSE) a Great Stock for Value Investors?
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Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Trinseo S.A. (TSE - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Trinseo has a trailing twelve months PE ratio of 8.90, as you can see in the chart below:
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 compares in at about 20.17. If we focus on the stock’s long-term PE trend, the current level puts Trinseo’s current PE ratio below its midpoint over the past three years, with the number having remained stable over the past few months.
Further, the stock’s PE also compares favorably with the Zacks classified Chemicals-Plastics sector’s trailing twelve months PE ratio, which stands at 11.88. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that Trinseo has a forward PE ratio (price relative to this year’s earnings) of just 8.76, so it is fair to say that a slightly more value-oriented path may be ahead for Trinseo stock in the near term too.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Trinseo has a P/S ratio of about 0.80. This is lower than the S&P 500 average, which comes in at 3.06 right now. Also, as we can see in the chart below, this is tad below the highs for this stock in particular over the past few years, suggesting some level of undervalued trading—at least compared to historical norms.
Broad Value Outlook
In aggregate, Trinseo currently has a Zacks Value Style Score of ‘A’, putting it into the top 20% of all stocks we cover from this look. This makes Trinseo a solid choice for value investors, and some of its other key metrics make this pretty clear too.
For example, the P/CF ratio of Trinseo (another great indicator of value) comes in at 6.12, which is lower than the industry average of 6.67. Clearly, TSE is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though Trinseo might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘B’ and a Momentum score of ‘B’. This gives TSE a Zacks VGM score—or its overarching fundamental grade—of ‘A’. (You can read more about the Zacks Style Scores here >>).
Meanwhile, the company’s recent earnings estimates have been encouraging. Notably, the current year has two seven estimates go higher in the past sixty days compared to no lower.
This has had just a small impact on the consensus estimate though as the full year estimate jumped 4.8%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
As a result of this bullish trend, the stock has a Zacks Rank #2 (Buy) and we are looking for a solid performance from the company in the near term.
Bottom Line
Trinseo is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Furthermore, a robust industry rank (among Top 23% of more than 250 industries) instills our confidence on the stock.
However, over the past two years, the Zacks Chemical-Plastics sub-industry has clearly underperformed the broader market, as you can see below:
Despite the poor past performance of the industry, a good industry rank signals that the stock is likely to benefit from favorable broader factors in the immediate future. Add to this the positive estimate revisions and robust value metrics, and we believe that we have a strong value contender in Trinseo.
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A bonus Zacks Special Report names this breakthrough and the 8 best stocks to exploit it. Like Apple in 2007, these companies are already strong and coiling for potential mega-gains. Click to see them right now >>
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Is Trinseo (TSE) a Great Stock for Value Investors?
Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Trinseo S.A. (TSE - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Trinseo has a trailing twelve months PE ratio of 8.90, as you can see in the chart below:
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 compares in at about 20.17. If we focus on the stock’s long-term PE trend, the current level puts Trinseo’s current PE ratio below its midpoint over the past three years, with the number having remained stable over the past few months.
Further, the stock’s PE also compares favorably with the Zacks classified Chemicals-Plastics sector’s trailing twelve months PE ratio, which stands at 11.88. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that Trinseo has a forward PE ratio (price relative to this year’s earnings) of just 8.76, so it is fair to say that a slightly more value-oriented path may be ahead for Trinseo stock in the near term too.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Trinseo has a P/S ratio of about 0.80. This is lower than the S&P 500 average, which comes in at 3.06 right now. Also, as we can see in the chart below, this is tad below the highs for this stock in particular over the past few years, suggesting some level of undervalued trading—at least compared to historical norms.
Broad Value Outlook
In aggregate, Trinseo currently has a Zacks Value Style Score of ‘A’, putting it into the top 20% of all stocks we cover from this look. This makes Trinseo a solid choice for value investors, and some of its other key metrics make this pretty clear too.
For example, the P/CF ratio of Trinseo (another great indicator of value) comes in at 6.12, which is lower than the industry average of 6.67. Clearly, TSE is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though Trinseo might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘B’ and a Momentum score of ‘B’. This gives TSE a Zacks VGM score—or its overarching fundamental grade—of ‘A’. (You can read more about the Zacks Style Scores here >>).
Meanwhile, the company’s recent earnings estimates have been encouraging. Notably, the current year has two seven estimates go higher in the past sixty days compared to no lower.
This has had just a small impact on the consensus estimate though as the full year estimate jumped 4.8%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Trinseo S.A. Price and Consensus
Trinseo S.A. Price and Consensus | Trinseo S.A. Quote
As a result of this bullish trend, the stock has a Zacks Rank #2 (Buy) and we are looking for a solid performance from the company in the near term.
Bottom Line
Trinseo is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Furthermore, a robust industry rank (among Top 23% of more than 250 industries) instills our confidence on the stock.
However, over the past two years, the Zacks Chemical-Plastics sub-industry has clearly underperformed the broader market, as you can see below:
Despite the poor past performance of the industry, a good industry rank signals that the stock is likely to benefit from favorable broader factors in the immediate future. Add to this the positive estimate revisions and robust value metrics, and we believe that we have a strong value contender in Trinseo.
More Stock News: 8 Companies Verge on Apple-Like Run
Did you miss Apple's 9X stock explosion after they launched their iPhone in 2007? Now 2017 looks to be a pivotal year to get in on another emerging technology expected to rock the market. Demand could soar from almost nothing to $42 billion by 2025. Reports suggest it could save 10 million lives per decade which could in turn save $200 billion in U.S. healthcare costs.
A bonus Zacks Special Report names this breakthrough and the 8 best stocks to exploit it. Like Apple in 2007, these companies are already strong and coiling for potential mega-gains. Click to see them right now >>