Should Value Investors Buy Donnelley Financial Solutions (DFIN) Stock?

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 tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

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 value investors might notice is Donnelley Financial Solutions (DFIN). DFIN is currently sporting a Zacks Rank #2 (Buy), as well as a Value grade of A. The stock has a Forward P/E ratio of 17.45. This compares to its industry's average Forward P/E of 25.45. Over the past year, DFIN's Forward P/E has been as high as 18.33 and as low as 13.56, with a median of 16.54.

Another notable valuation metric for DFIN is its P/B ratio of 3.38. 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 company's current P/B looks solid when compared to its industry's average P/B of 3.99. Over the past 12 months, DFIN's P/B has been as high as 4.59 and as low as 2.52, with a median of 3.89.

Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. DFIN has a P/S ratio of 1.32. This compares to its industry's average P/S of 1.62.

Finally, our model also underscores that DFIN has a P/CF ratio of 9.90. 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. This company's current P/CF looks solid when compared to its industry's average P/CF of 17.20. Over the past year, DFIN's P/CF has been as high as 12.80 and as low as 7.09, with a median of 10.59.

Value investors will likely look at more than just these metrics, but the above data helps show that Donnelley Financial Solutions is likely undervalued currently. And when considering the strength of its earnings outlook, DFIN sticks out as one of the market's strongest value stocks.

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This article originally published on Zacks Investment Research (zacks.com).

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