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, 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 rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
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 The Cheesecake Factory (CAKE). CAKE is currently sporting a Zacks Rank #2 (Buy) and an A for Value. The stock is trading with P/E ratio of 16.61 right now. For comparison, its industry sports an average P/E of 26.11. Over the past year, CAKE's Forward P/E has been as high as 17.03 and as low as 10.04, with a median of 13.20.
We also note that CAKE holds a PEG ratio of 1.55. 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. CAKE's PEG compares to its industry's average PEG of 2.06. Over the last 12 months, CAKE's PEG has been as high as 1.59 and as low as 0.93, with a median of 1.23.
Finally, investors will want to recognize that CAKE has a P/CF ratio of 12.22. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. CAKE's current P/CF looks attractive when compared to its industry's average P/CF of 23.48. CAKE's P/CF has been as high as 12.49 and as low as 7.85, with a median of 9.60, all within the past year.
These figures are just a handful of the metrics value investors tend to look at, but they help show that The Cheesecake Factory is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, CAKE feels like a great value stock at the moment.
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The Cheesecake Factory Incorporated (CAKE): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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