Are Investors Undervaluing Continental (CTTAY) Right Now?

Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

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.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

One stock to keep an eye on is Continental (CTTAY). CTTAY is currently sporting a Zacks Rank #2 (Buy), as well as an A grade for Value. The stock is trading with P/E ratio of 9.18 right now. For comparison, its industry sports an average P/E of 21.18. Over the last 12 months, CTTAY's Forward P/E has been as high as 10.00 and as low as 6.21, with a median of 7.65.

Investors should also note that CTTAY holds a PEG ratio of 0.68. 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. CTTAY's PEG compares to its industry's average PEG of 1.36. Within the past year, CTTAY's PEG has been as high as 0.72 and as low as 0.24, with a median of 0.35.

We should also highlight that CTTAY has a P/B ratio of 2.87. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. This stock's P/B looks solid versus its industry's average P/B of 3.55. Within the past 52 weeks, CTTAY's P/B has been as high as 2.97 and as low as 0.75, with a median of 0.89.

Value investors also use the P/S ratio. The P/S ratio is calculated as price divided by 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. CTTAY has a P/S ratio of 0.47. This compares to its industry's average P/S of 0.77.

These figures are just a handful of the metrics value investors tend to look at, but they help show that Continental is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, CTTAY feels like a great value stock at the moment.

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

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