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.
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 Yum China (YUMC). YUMC is currently holding a Zacks Rank #2 (Buy) and a Value grade of A. The stock holds a P/E ratio of 16, while its industry has an average P/E of 24.71. Over the past 52 weeks, YUMC's Forward P/E has been as high as 21.09 and as low as 14.45, with a median of 17.76.
Investors will also notice that YUMC has a PEG ratio of 1.51. 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. YUMC's PEG compares to its industry's average PEG of 1.98. Over the past 52 weeks, YUMC's PEG has been as high as 1.92 and as low as 1.25, with a median of 1.58.
Finally, we should also recognize that YUMC has a P/CF ratio of 11.87. 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 23.69. Within the past 12 months, YUMC's P/CF has been as high as 14.79 and as low as 10.47, with a median of 12.61.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Yum China is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, YUMC feels like a great value stock at the moment.
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Yum China (YUMC): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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