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Is Showa Denko K.K. (SHWDY) Stock Undervalued Right Now?


Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

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.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system’s “Value” category. Stocks with “A” grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

One company to watch right now is Showa Denko K.K. (SHWDY). SHWDY is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock holds a P/E ratio of 12.43, while its industry has an average P/E of 13.91. Over the last 12 months, SHWDY’s Forward P/E has been as high as 20.50 and as low as 3.40, with a median of 3.86.

SHWDY is also sporting a PEG ratio of 0.95. 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. SHWDY’s industry currently sports an average PEG of 1.66. SHWDY’s PEG has been as high as 0.97 and as low as 0.76, with a median of 0.80, all within the past year.

We should also highlight that SHWDY has a P/B ratio of 0.67. The P/B ratio pits a stock’s market value against its book value, which is defined as total assets minus total liabilities. SHWDY’s current P/B looks attractive when compared to its industry’s average P/B of 1.77. Over the past year, SHWDY’s P/B has been as high as 10.25 and as low as 0.63, with a median of 8.30.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. SHWDY has a P/S ratio of 0.38. This compares to its industry’s average P/S of 0.64.

These figures are just a handful of the metrics value investors tend to look at, but they help show that Showa Denko K.K. Is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, SHWDY feels like a great value stock at the moment.

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