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, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
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 stock to keep an eye on is Omnicom Group (OMC). OMC is currently sporting a Zacks Rank #2 (Buy), as well as an A grade for Value.
Another valuation metric that we should highlight is OMC's P/B ratio of 2.95. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. This stock's P/B looks solid versus its industry's average P/B of 7.18. Over the past 12 months, OMC's P/B has been as high as 4.84 and as low as 2.74, with a median of 3.61.
Finally, our model also underscores that OMC has a P/CF ratio of 8.77. 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 9.76. Over the past year, OMC's P/CF has been as high as 12.32 and as low as 8.13, with a median of 10.02.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Omnicom Group is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, OMC feels like a great value stock at the moment.
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Omnicom Group Inc. (OMC): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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