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Should Value Investors Buy POSCO (PKX) Stock?

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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.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

POSCO (PKX - Free Report) is a stock many investors are watching right now. PKX is currently sporting a Zacks Rank #2 (Buy), as well as a Value grade of A.

PKX is also sporting a PEG ratio of 0.33. 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. PKX's industry has an average PEG of 0.46 right now. Within the past year, PKX's PEG has been as high as 2.55 and as low as 0.27, with a median of 0.37.

Value investors also use the P/S ratio. The P/S ratio is calculated as price divided by sales. This is a preferred metric because revenue can't really be manipulated, so sales are often a truer performance indicator. PKX has a P/S ratio of 0.33. This compares to its industry's average P/S of 0.34.

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


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