Are Investors Undervaluing Mistras Group (MG) Right Now?

Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

One company to watch right now is Mistras Group (MG). MG is currently sporting a Zacks Rank #2 (Buy), as well as a Value grade of A. The stock has a Forward P/E ratio of 12.37. This compares to its industry's average Forward P/E of 26.38. Over the last 12 months, MG's Forward P/E has been as high as 13.78 and as low as 8.93, with a median of 11.00.

We also note that MG holds a PEG ratio of 0.77. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. MG's industry has an average PEG of 1.52 right now. MG's PEG has been as high as 0.86 and as low as 0.56, with a median of 0.68, all within the past year.

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. MG has a P/S ratio of 0.82. This compares to its industry's average P/S of 1.76.

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