The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.
Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.
Edgewell Personal Care (EPC) is a stock many investors are watching right now. EPC is currently holding a Zacks Rank #2 (Buy) and a Value grade of A. The stock is trading with a P/E ratio of 8.33, which compares to its industry's average of 19.85. Over the past year, EPC's Forward P/E has been as high as 13.00 and as low as 7.50, with a median of 10.20.
Value investors also use the P/S ratio. The P/S ratio is calculated as price divided by sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. EPC has a P/S ratio of 0.56. This compares to its industry's average P/S of 0.93.
Finally, investors should note that EPC has a P/CF ratio of 7.16. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 14. EPC's P/CF has been as high as 10.23 and as low as 6.41, with a median of 8.74, all within the past year.
Value investors will likely look at more than just these metrics, but the above data helps show that Edgewell Personal Care is likely undervalued currently. And when considering the strength of its earnings outlook, EPC sticks out as one of the market's strongest value stocks.
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Edgewell Personal Care Company (EPC): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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