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.
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 use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
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 to watch right now is UFP Industries (UFPI). UFPI is currently sporting a Zacks Rank #2 (Buy), as well as an A grade for Value. The stock is trading with P/E ratio of 15.63 right now. For comparison, its industry sports an average P/E of 31.49. Over the past year, UFPI's Forward P/E has been as high as 18.85 and as low as 13.54, with a median of 15.62.
Another valuation metric that we should highlight is UFPI's P/B ratio of 1.76. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. This stock's P/B looks attractive against its industry's average P/B of 3.99. Over the past year, UFPI's P/B has been as high as 2.64 and as low as 1.76, with a median of 2.00.
Value investors also use the P/S ratio. The P/S ratio is calculated as price divided by sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. UFPI has a P/S ratio of 1.03. This compares to its industry's average P/S of 2.34.
Finally, our model also underscores that UFPI has a P/CF ratio of 11.26. 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. UFPI's P/CF compares to its industry's average P/CF of 19.36. Over the past year, UFPI's P/CF has been as high as 14.20 and as low as 10.98, with a median of 12.12.
These figures are just a handful of the metrics value investors tend to look at, but they help show that UFP Industries is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, UFPI feels like a great value stock at the moment.
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UFP Industries, Inc. (UFPI): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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