Should Value Investors Buy EmbraerEmpresa Brasileira de Aeronautica (ERJ) Stock?

The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

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 EmbraerEmpresa Brasileira de Aeronautica (ERJ Quick QuoteERJ – Free Report) . ERJ is currently holding a Zacks Rank of #1 (Strong Buy) and a Value grade of A. The stock holds a P/E ratio of 21.45, while its industry has an average P/E of 22.35. Over the last 12 months, ERJ’s Forward P/E has been as high as 24.12 and as low as 13.64, with a median of 17.69.

We also note that ERJ holds a PEG ratio of 0.98. 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. ERJ’s PEG compares to its industry’s average PEG of 1.84. Within the past year, ERJ’s PEG has been as high as 1.09 and as low as 0.88, with a median of 0.98.

Another notable valuation metric for ERJ is its P/B ratio of 2.89. The P/B ratio pits a stock’s market value against 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 4.13. Over the past year, ERJ’s P/B has been as high as 3.10 and as low as 1.44, with a median of 1.90.

Value investors also use the P/S ratio. The P/S ratio is 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. ERJ has a P/S ratio of 1.42. This compares to its industry’s average P/S of 1.71.

Finally, our model also underscores that ERJ has a P/CF ratio of 16.22. This figure highlights a company’s operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. This company’s current P/CF looks solid when compared to its industry’s average P/CF of 38.77. Over the past 52 weeks, ERJ’s P/CF has been as high as 17.38 and as low as 7.62, with a median of 9.65.

These are only a few of the key metrics included in EmbraerEmpresa Brasileira de Aeronautica’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, ERJ looks like an impressive value stock at the moment.