While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.
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 rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
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.
One company to watch right now is Quanex Building Products (NX). NX is currently sporting a Zacks Rank #2 (Buy), as well as a Value grade of A. The stock is trading with P/E ratio of 6.86 right now. For comparison, its industry sports an average P/E of 17.18. Over the last 12 months, NX's Forward P/E has been as high as 12.99 and as low as 5.76, with a median of 9.37.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's 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. NX has a P/S ratio of 0.57. This compares to its industry's average P/S of 1.55.
Finally, our model also underscores that NX has a P/CF ratio of 9.31. 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. NX's P/CF compares to its industry's average P/CF of 14.06. Within the past 12 months, NX's P/CF has been as high as 15.86 and as low as 6.94, with a median of 9.28.
These are just a handful of the figures considered in Quanex Building Products's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that NX is an impressive value stock right now.
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Quanex Building Products Corporation (NX): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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