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 Post Holdings (POST). POST is currently sporting a Zacks Rank of #2 (Buy) and an A for Value.
Investors should also recognize that POST has a P/B ratio of 1.63. 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 company's current P/B looks solid when compared to its industry's average P/B of 1.98. POST's P/B has been as high as 1.75 and as low as 1.51, with a median of 1.63, over the past year.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. POST has a P/S ratio of 0.79. This compares to its industry's average P/S of 0.94.
Finally, we should also recognize that POST has a P/CF ratio of 8.39. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 13.92. Over the past year, POST's P/CF has been as high as 9.41 and as low as 7.78, with a median of 8.51.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Post Holdings is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, POST feels like a great value stock at the moment.
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Post Holdings, Inc. (POST): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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