Should Value Investors Buy Ingredion (INGR) 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.

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.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

Ingredion (INGR) is a stock many investors are watching right now. INGR is currently sporting a Zacks Rank #2 (Buy) and an A for Value. The stock is trading with P/E ratio of 12.2 right now. For comparison, its industry sports an average P/E of 16.02. INGR's Forward P/E has been as high as 14.44 and as low as 10.95, with a median of 12.17, all within the past year.

Investors should also note that INGR holds a PEG ratio of 1.11. 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. INGR's PEG compares to its industry's average PEG of 1.21. Over the last 12 months, INGR's PEG has been as high as 1.31 and as low as 1.00, with a median of 1.11.

Finally, we should also recognize that INGR has a P/CF ratio of 10.80. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 14.86. Over the past 52 weeks, INGR's P/CF has been as high as 11.48 and as low as 8.59, with a median of 10.20.

Investors could also keep in mind United Natural Foods (UNFI), another Food - Miscellaneous stock with a Zacks Rank of #1 (Strong Buy) and Value grade of A.

United Natural Foods also has a P/B ratio of 0.87 compared to its industry's price-to-book ratio of 2.02. Over the past year, its P/B ratio has been as high as 1.27, as low as 0.42, with a median of 0.91.

Value investors will likely look at more than just these metrics, but the above data helps show that Ingredion and United Natural Foods are likely undervalued currently. And when considering the strength of its earnings outlook, INGR and UNFI sticks out as one of the market's strongest value stocks.

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

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