Many investors like to look for value in stocks, but this can be very tough to define. There is great debate regarding which metrics are the best to focus on in this regard, and which are not really quality indicators of future performance. Fortunately, with our new style score system we have identified the key statistics to pay close attention to and thus which stocks might be the best for value investors in the near term.
This method discovered several great candidates for value-oriented investors, but today let’s focus on Celadon Group Inc. (CGI) as this stock is looking especially impressive right now. And while there are numerous reasons why this is the case, we have highlighted three of the most vital reasons for CGI’s status as a solid value stock below:
Price to Forward Sales for Celadon Group
One of the most underrated ratios for value investors is the price/forward sales metric. This ratio shows investors how much they are paying for each dollar of revenues generated. In other words, a lower number is better here while a price to sales ratio of 1 means that you are paying one dollar for each dollar in sales.
With a P/S ratio of 0.67, CGI investors are paying 67 cents in stock price for each dollar of revenue generated by the company. Compare this to the industry average of 0.86, and it is safe to say that CGI is undervalued compared to many of its peers on this important metric.
Forward PE for Celadon Group
Easily one of the most popular readings for value investors, the forward PE ratio shows us the current price of a stock divided by the full year earnings. Generally speaking, value investors like to see this ratio below 20, though it can vary by industry.
Right now, CGI has a forward PE of just 13.19, which means that investors are paying $13.19 for each dollar in expected Celadon Group earnings this year. Compared to the industry at large this is pretty favorable as the overall space has an average PE of 17.54 in comparison.
CGI Earnings Estimate Revisions Moving in the Right Direction
The solid value ratios outlined in the preceding paragraphs might be enough for some investors, but we should also note that the earnings estimate revisions have been trending in a positive direction as well. Analysts who follow CGI stock have been raising their estimates for the company lately, meaning that the EPS picture is looking a bit more favorably for Celadon Group now.
Over the past 30 days 3 earnings estimates have gone higher compared to 1 lower for the full year. These revisions have helped to boost the consensus estimate as 30 days ago CGI was expected to post earnings of $1.59 per share for the full year though today it looks to have EPS of $1.64 for the full year.
Bottom Line
For the reasons detailed above, investors shouldn’t be surprised to read that we have CGI as a stock with a Value Score of ‘A’ and a Zacks Rank #2 (Buy). So if you are a value investor, definitely keep CGI on your short list as this looks be a stock that is very well-positioned for gains in the near term.
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