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 rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.
One company value investors might notice is Cardinal Health (CAH). CAH is currently sporting a Zacks Rank #2 (Buy) and an A for Value. The stock is trading with a P/E ratio of 15.48, which compares to its industry's average of 17.65. 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 popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. CAH's PEG compares to its industry's average PEG of 1.85. CAH's PEG has been as high as 1.88 and as low as 1.22, with a median of 1.49, all within the past year.
Finally, investors should note that CAH has a P/CF ratio of 15.27. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. CAH's current P/CF looks attractive when compared to its industry's average P/CF of 18.41. CAH's P/CF has been as high as 17.47 and as low as 12.96, with a median of 15.12, all within the past year.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Cardinal Health is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, CAH feels like a great 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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