Investing in value is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn't want to find stocks that fly under the radar and make compelling purchases, or offer attractive discounts on fair value? One way to find these companies is to look at several key metrics and financial reports, many of which are crucial in the process of selecting valuable stocks. Let's put Sasol Ltd's SSL shares in this equation and find out if it's a good choice for value-oriented investors right now, or if investors who subscribe to this methodology should look elsewhere for the best choices: PE Ratio A key metric that investors Of value they always look is the price / earnings ratio, or PE for short. This shows us how much investors are willing to pay for every dollar of earnings on a given security and is easily one of the most popular financial reports in the world. The best use of the PE ratio is to compare the current PE ratio of the stock with: a) where this ratio has been in the past; b) how it compares with the average for industry / sector; and c) how it compares with the market as a whole. On this front, Sasol has a dragged twelve month PE ratio of 2.03, as you can see in the table below:
This level compares quite favorably with the market in general, since the PE for the S&P 500 stands at around 18.2. If we focus on the long-term PE trend, Sasol's current PE level places it below its midpoint (which is 9.97) in the past five years. In addition, the current level is well below the headline highs, suggesting it may be a solid entry point.
In addition, the stock's PE compares positively with the twelve-month PE ratio spent by the Zacks Oils-Energy sector, which is 10.1. At the very least, this indicates that the stock is relatively undervalued at the moment, compared to its peers.
We should also point out that Sasol has a PE (price relative to earnings this year) ratio of only 13.3, which is higher than the current level. Hence, it is fair to expect a rise in the company's stock price in the short term. P / S Ratio Another key metric to note is the price / sales ratio. This approach compares the price of a particular stock with its total sales, where a lower reading is generally considered better. Some people like this metric more than others focused on value because it looks at sales, something that is much more difficult to handle with accounting tricks than profits. Right now, Sasol has a P / S ratio of around 0.19. This is a little lower than the average S&P 500, which reaches 3.06x right now. Furthermore, as we can see in the following chart, this is far below the highs of this title, particularly in recent years.
If anything, this suggests some level of undervalued trading, at least compared to historical norms. Commercial Value Outlook In total, Sasol currently has an A-value score, placing it in the top 20% of all titles we cover from this aspect. This makes Sasol a solid choice for value investors and some of its other key metrics also make it clear enough. For example, the P / CF ratio (another large indicator of value) reaches 1.05, which is much better than the average sector of 2.76. Clearly, SSL is a solid choice on the value front from multiple angles. What is the overall stock? Although Sasol may be a good choice for value investors, there are many other factors to consider before investing in this name. In particular, it is worth noting that the company has a growth score of D and a momentum score of C. This gives SSL a ZG VGM score – or its overall fundamental grade – of B. ( You can read more about Zacks style scores here >>) In the meantime, the company's recent earnings estimates have been at best sad. The current quarter saw no estimate go higher in the past sixty days than a lower one, while the full year estimate saw no one up and down in the same period of time. This had a significant impact on the consensus estimate although the consensus estimate for the current quarter has plummeted 78% in the past two months, while the full year estimate has declined 79.2%. You can see the trend of the consensus estimate and the recent price action for the stock in the chart below:
Sasol Ltd Price and consent
Sasol Ltd price consensus chart Quote from Sasol Ltd
Despite the bullish trend, the stock has a Zacks Rank # 3 (Hold), which is why we are seeking online performance from the company in the short term. Bottom LineSasol is an inspired choice for value investors, as it is difficult to beat its incredible range of statistics on this front. However, with a slow industry level (between 26% lower than over 250 sectors) and a level 3 Zacks, it is difficult to be too enthusiastic about this company in general. In fact, in the past two years, the international – integrated – oil and gas industry Zacks has clearly underperformed the overall market, as you can see below:
Therefore, valuable investors may want to wait for analysts' estimates and sentiment to change in this name first, but once that happens, this stock may be a compelling choice. 1 favorite stock to be gained + 100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth. Most of the stocks in this report fly under the Wall Street radar, which offers a great opportunity to enter the ground floor. Today, see these 5 potential home rides >>
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The views and opinions expressed in this document are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.