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 use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
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.
Yum China (YUMC) is a stock many investors are watching right now. YUMC is currently holding a Zacks Rank #2 (Buy) and a Value grade of A. The stock is trading with P/E ratio of 16 right now. For comparison, its industry sports an average P/E of 19.91. YUMC's Forward P/E has been as high as 21.09 and as low as 14.45, with a median of 17.76, all within the past year.
Finally, investors should note that YUMC has a P/CF ratio of 11.87. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 18.68. Within the past 12 months, YUMC's P/CF has been as high as 14.79 and as low as 10.47, with a median of 12.61.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Yum China is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, YUMC feels like a great value stock at the moment.
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Yum China (YUMC): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).