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Should Value Investors Buy Companhia de saneamento Basico Do Estado De Sao Paulo Sabesp (SBS) Stock?

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.

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 fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.

Companhia de saneamento Basico Do Estado De Sao Paulo Sabesp (SBS) is a stock many investors are watching right now. SBS is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock has a Forward P/E ratio of 11.55. This compares to its industry's average Forward P/E of 18.55. Over the past year, SBS's Forward P/E has been as high as 16.55 and as low as 11.44, with a median of 13.31.

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We also note that SBS holds a PEG ratio of 0.54. 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. SBS's PEG compares to its industry's average PEG of 1.24. Over the past 52 weeks, SBS's PEG has been as high as 1.18 and as low as 0.54, with a median of 0.94.

Another notable valuation metric for SBS is its P/B ratio of 1.55. The P/B ratio pits a stock's market value against 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 2.79. Within the past 52 weeks, SBS's P/B has been as high as 1.92 and as low as 1.28, with a median of 1.56.

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 prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. SBS has a P/S ratio of 1.79. This compares to its industry's average P/S of 4.64.

Finally, investors will want to recognize that SBS has a P/CF ratio of 7.27. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. SBS's current P/CF looks attractive when compared to its industry's average P/CF of 14.59. Over the past year, SBS's P/CF has been as high as 9.23 and as low as 6.59, with a median of 7.85.

Value investors will likely look at more than just these metrics, but the above data helps show that Companhia de saneamento Basico Do Estado De Sao Paulo Sabesp is likely undervalued currently. And when considering the strength of its earnings outlook, SBS sticks out at as one of the market's strongest value stocks.

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Companhia de saneamento Basico Do Estado De Sao Paulo - Sabesp (SBS) : Free Stock Analysis Report

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Zacks Investment Research