Are Investors Undervaluing Avnet (AVT) Right Now?

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 a variety of methods, including tried-and-true valuation metrics, to find these stocks.

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.

Avnet (AVT) is a stock many investors are watching right now. AVT is currently sporting a Zacks Rank #1 (Strong Buy) and an A for Value. The stock holds a P/E ratio of 10.47, while its industry has an average P/E of 12.69. Over the past 52 weeks, AVT's Forward P/E has been as high as 16.75 and as low as 8.05, with a median of 10.50.

We also note that AVT holds a PEG ratio of 0.36. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. AVT's PEG compares to its industry's average PEG of 0.49. Over the last 12 months, AVT's PEG has been as high as 1.89 and as low as 0.35, with a median of 0.81.

Investors should also recognize that AVT has a P/B ratio of 0.89. The P/B is a method of comparing a stock's market value to 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 2.05. Over the past 12 months, AVT's P/B has been as high as 1.00 and as low as 0.71, with a median of 0.91.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's 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. AVT has a P/S ratio of 0.26. This compares to its industry's average P/S of 0.48.

Finally, our model also underscores that AVT has a P/CF ratio of 12.36. 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. AVT's P/CF compares to its industry's average P/CF of 16.17. Over the past 52 weeks, AVT's P/CF has been as high as 13.11 and as low as 7.28, with a median of 9.98.

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

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This article originally published on Zacks Investment Research (zacks.com).

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