Should Value Investors Buy Montauk Renewables (MNTK) Stock?

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 tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

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.

One stock to keep an eye on is Montauk Renewables (MNTK). MNTK is currently holding a Zacks Rank #1 (Strong Buy) and a Value grade of A.

We should also highlight that MNTK has a P/B ratio of 1.17. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. This stock's P/B looks attractive against its industry's average P/B of 2.80. MNTK's P/B has been as high as 3.15 and as low as 0.97, with a median of 1.39, over the past year.

Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. MNTK has a P/S ratio of 1.32. This compares to its industry's average P/S of 2.28.

Finally, investors should note that MNTK has a P/CF ratio of 10.46. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 15.75. Over the past 52 weeks, MNTK's P/CF has been as high as 20.91 and as low as 7.73, with a median of 11.62.

Value investors will likely look at more than just these metrics, but the above data helps show that Montauk Renewables is likely undervalued currently. And when considering the strength of its earnings outlook, MNTK 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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