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.
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.
One company to watch right now is Cardinal Health (CAH). CAH is currently sporting a Zacks Rank #2 (Buy), as well as a Value grade of A. The stock holds a P/E ratio of 15.48, while its industry has an average P/E of 17.77. Over the last 12 months, CAH's Forward P/E has been as high as 20.15 and as low as 13.69, with a median of 15.30.
Investors will also notice that CAH has a PEG ratio of 1.24. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. CAH's industry currently sports an average PEG of 1.90. Over the past 52 weeks, CAH's PEG has been as high as 1.88 and as low as 1.22, with a median of 1.49.
Finally, we should also recognize that CAH has a P/CF ratio of 15.27. 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 18.41. Over the past 52 weeks, CAH's P/CF has been as high as 17.47 and as low as 12.96, with a median of 15.12.
These are only a few of the key metrics included in Cardinal Health's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, CAH looks like an impressive value stock at the moment.
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Cardinal Health, Inc. (CAH): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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