The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.
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 fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
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 to watch right now is Post Holdings (POST). POST is currently sporting a Zacks Rank #2 (Buy), as well as a Value grade of A. The stock is trading with a P/E ratio of 14.57, which compares to its industry's average of 15.95. Over the past year, POST's Forward P/E has been as high as 19.52 and as low as 14.57, with a median of 17.11.
Investors should also recognize that POST has a P/B ratio of 1.55. The P/B ratio is used to compare a stock's market value with 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 1.82. POST's P/B has been as high as 1.75 and as low as 1.51, with a median of 1.65, over the past year.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. POST has a P/S ratio of 0.75. This compares to its industry's average P/S of 1.03.
Finally, we should also recognize that POST has a P/CF ratio of 7.94. 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. POST's current P/CF looks attractive when compared to its industry's average P/CF of 14.77. Over the past 52 weeks, POST's P/CF has been as high as 9.41 and as low as 7.78, with a median of 8.49.
Value investors will likely look at more than just these metrics, but the above data helps show that Post Holdings is likely undervalued currently. And when considering the strength of its earnings outlook, POST sticks out as one of the market's strongest value stocks.
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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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