Is Paranaense de Energia (ELP) Stock Undervalued Right Now?

Zacks Equity Research
·3-min read

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.

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

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.

Paranaense de Energia (ELP) is a stock many investors are watching right now. ELP is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock holds a P/E ratio of 10.83, while its industry has an average P/E of 12.96. Over the past year, ELP's Forward P/E has been as high as 14.21 and as low as 5.94, with a median of 10.29.

Another notable valuation metric for ELP is its P/B ratio of 0.87. 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 attractive against its industry's average P/B of 1.52. Over the past 12 months, ELP's P/B has been as high as 1.10 and as low as 0.51, with a median of 0.85.

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. ELP has a P/S ratio of 0.78. This compares to its industry's average P/S of 1.82.

Finally, investors will want to recognize that ELP has a P/CF ratio of 3.34. 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. ELP's current P/CF looks attractive when compared to its industry's average P/CF of 7.41. Over the past 52 weeks, ELP's P/CF has been as high as 6.47 and as low as 2.90, with a median of 4.44.

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


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