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Are Investors Undervaluing Koppers (KOP) 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 rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

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 to watch right now is Koppers (KOP). KOP is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock is trading with P/E ratio of 6.95 right now. For comparison, its industry sports an average P/E of 13.12. Over the past 52 weeks, KOP's Forward P/E has been as high as 8.56 and as low as 4.57, with a median of 6.65.

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Another valuation metric that we should highlight is KOP's P/B ratio of 1.50. 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 2.02. Over the past year, KOP's P/B has been as high as 1.98 and as low as 1.10, with a median of 1.51.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by 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. KOP has a P/S ratio of 0.34. This compares to its industry's average P/S of 0.75.

Finally, our model also underscores that KOP has a P/CF ratio of 5.32. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 7.13. Over the past 52 weeks, KOP's P/CF has been as high as 6.77 and as low as 3.35, with a median of 4.76.

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

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Zacks Investment Research