Are Investors Undervaluing Avnet (AVT) Right Now?

The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.

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 a variety of methods, including tried-and-true valuation metrics, to find these stocks.

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 company value investors might notice is Avnet (AVT). AVT is currently sporting a Zacks Rank #1 (Strong Buy) and an A for Value. The stock is trading with P/E ratio of 10.47 right now. For comparison, its industry sports an average P/E of 15.20. Over the past 52 weeks, AVT's Forward P/E has been as high as 16.75 and as low as 8.05, with a median of 10.50.

We also note that AVT holds a PEG ratio of 0.36. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. AVT's industry has an average PEG of 0.74 right now. Within the past year, AVT's PEG has been as high as 1.89 and as low as 0.35, with a median of 0.81.

Another valuation metric that we should highlight is AVT's P/B ratio of 0.89. 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 1.88. Within the past 52 weeks, AVT's P/B has been as high as 1.00 and as low as 0.71, with a median of 0.91.

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 preferred metric because revenue can't really be manipulated, so sales are often a truer performance indicator. AVT has a P/S ratio of 0.26. This compares to its industry's average P/S of 0.48.

Finally, we should also recognize that AVT has a P/CF ratio of 12.36. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. AVT's current P/CF looks attractive when compared to its industry's average P/CF of 17.69. Over the past year, AVT's P/CF has been as high as 13.11 and as low as 7.28, with a median of 9.98.

Value investors will likely look at more than just these metrics, but the above data helps show that Avnet is likely undervalued currently. And when considering the strength of its earnings outlook, AVT sticks out as one of the market's strongest value stocks.

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This article originally published on Zacks Investment Research (zacks.com).

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