While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.
Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. 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.
One company value investors might notice is Cardinal Health (CAH – Free Report) . CAH is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock has a Forward P/E ratio of 15.26. This compares to its industry’s average Forward P/E of 16.92. Over the past year, CAH’s Forward P/E has been as high as 15.66 and as low as 12.37, with a median of 14.27.
CAH is also sporting a PEG ratio of 1.60. 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 1.86. Over the last 12 months, CAH’s PEG has been as high as 1.61 and as low as 0.91, with a median of 1.39.
Finally, investors will want to recognize that CAH has a P/CF ratio of 15.74. 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 stock’s P/CF looks attractive against its industry’s average P/CF of 17.83. Within the past 12 months, CAH’s P/CF has been as high as 20.81 and as low as 13.22, with a median of 15.27.
These are just a handful of the figures considered in Cardinal Health’s great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that CAH is an impressive value stock right now.
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