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 a variety of methods, including tried-and-true valuation metrics, to find these stocks.
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 Central Garden & Pet (CENTA). CENTA is currently sporting a Zacks Rank #2 (Buy), as well as an A grade for Value. The stock has a Forward P/E ratio of 11.58. This compares to its industry's average Forward P/E of 16.60. Over the past 52 weeks, CENTA's Forward P/E has been as high as 16.39 and as low as 11.42, with a median of 13.11.
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. CENTA has a P/S ratio of 0.59. This compares to its industry's average P/S of 0.7.
Finally, investors will want to recognize that CENTA has a P/CF ratio of 8.13. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. CENTA's current P/CF looks attractive when compared to its industry's average P/CF of 15.44. CENTA's P/CF has been as high as 11.47 and as low as 7.92, with a median of 9.09, all within the past year.
These are only a few of the key metrics included in Central Garden & Pet'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, CENTA looks like an impressive value stock at the moment.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Central Garden & Pet Company (CENTA): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
Zacks Investment Research
