Is Reliance Steel (RS) Stock Undervalued Right Now?

While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

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.

Reliance Steel (RS) is a stock many investors are watching right now. RS is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock has a Forward P/E ratio of 9.56. This compares to its industry's average Forward P/E of 10.20. RS's Forward P/E has been as high as 17.02 and as low as 9.48, with a median of 12.57, all within the past year.

Investors should also note that RS holds a PEG ratio of 1.06. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. RS's industry currently sports an average PEG of 1.65. Over the last 12 months, RS's PEG has been as high as 1.89 and as low as 1.05, with a median of 1.40.

Another valuation metric that we should highlight is RS's P/B ratio of 1.24. 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 1.28. Over the past 12 months, RS's P/B has been as high as 1.47 and as low as 1.21, with a median of 1.32.

Finally, investors will want to recognize that RS has a P/CF ratio of 6.15. 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. RS's P/CF compares to its industry's average P/CF of 8.98. Over the past year, RS's P/CF has been as high as 10.81 and as low as 6.11, with a median of 7.84.

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

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Reliance Steel & Aluminum Co. (RS) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research