Is Ultrapar Participacoes (UGP) Stock Undervalued Right Now?
Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.
Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.
Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.
One company to watch right now is Ultrapar Participacoes (UGP). UGP is currently sporting a Zacks Rank of #1 (Strong Buy), as well as an A grade for Value. The stock has a Forward P/E ratio of 9.85. This compares to its industry's average Forward P/E of 14.06. Over the past year, UGP's Forward P/E has been as high as 17.67 and as low as 8.89, with a median of 10.79.
Another notable valuation metric for UGP is its P/B ratio of 1.21. The P/B is a method of comparing a stock's market value to 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 1.69. Over the past 12 months, UGP's P/B has been as high as 2.16 and as low as 1.03, with a median of 1.53.
Finally, investors should note that UGP has a P/CF ratio of 4.35. 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 10.11. Over the past 52 weeks, UGP's P/CF has been as high as 8.67 and as low as 3.70, with a median of 5.82.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Ultrapar Participacoes is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, UGP feels like a great value stock at the moment.
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