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.
Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
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.
Quanex Building Products (NX) is a stock many investors are watching right now. NX is currently sporting a Zacks Rank #1 (Strong Buy), as well as a Value grade of A. The stock holds a P/E ratio of 6.49, while its industry has an average P/E of 15.44. Over the last 12 months, NX's Forward P/E has been as high as 12.99 and as low as 5.76, with a median of 9.67.
NX is also sporting a PEG ratio of 0.46. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. NX's PEG compares to its industry's average PEG of 1.36. NX's PEG has been as high as 0.93 and as low as 0.41, with a median of 0.69, all within the past year.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. NX has a P/S ratio of 0.54. This compares to its industry's average P/S of 1.54.
Finally, we should also recognize that NX has a P/CF ratio of 8.70. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 12.67. Over the past 52 weeks, NX's P/CF has been as high as 15.86 and as low as 6.94, with a median of 8.89.
These are only a few of the key metrics included in Quanex Building Products'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, NX looks like an impressive value stock at the moment.
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Quanex Building Products Corporation (NX): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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