Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.
Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.
Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.
One company to watch right now is Cardinal Health (CAH). CAH is currently sporting a Zacks Rank #2 (Buy), as well as a Value grade of A.
We also note that CAH holds a PEG ratio of 1.63. 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 1.75. Over the last 12 months, CAH's PEG has been as high as 1.88 and as low as 1.03, with a median of 1.48.
Finally, investors will want to recognize that CAH has a P/CF ratio of 16.98. 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. CAH's current P/CF looks attractive when compared to its industry's average P/CF of 17.32. Within the past 12 months, CAH's P/CF has been as high as 19.44 and as low as 12.96, with a median of 15.08.
Value investors will likely look at more than just these metrics, but the above data helps show that Cardinal Health is likely undervalued currently. And when considering the strength of its earnings outlook, CAH sticks out as one of the market's strongest value stocks.
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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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