Should Value Investors Buy Central Garden & Pet (CENTA) Stock?

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 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 value investors might notice is Central Garden & Pet (CENTA). CENTA is currently sporting a Zacks Rank #2 (Buy), as well as an A grade for Value. The stock holds a P/E ratio of 11.58, while its industry has an average P/E of 18.23. CENTA's Forward P/E has been as high as 16.39 and as low as 11.42, with a median of 13.11, all within the past year.

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 0.69. This compares to its industry's average P/S of 0.72.

Finally, our model also underscores that CENTA has a P/CF ratio of 8.13. 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 16.84. Over the past 52 weeks, CENTA's P/CF has been as high as 11.47 and as low as 7.92, with a median of 9.09.

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.

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This article originally published on Zacks Investment Research (zacks.com).

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