Should Value Investors Buy VAREX IMAGING (VREX) 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.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

VAREX IMAGING (VREX) is a stock many investors are watching right now. VREX is currently holding a Zacks Rank #2 (Buy) and a Value grade of A. The stock is trading with P/E ratio of 12.78 right now. For comparison, its industry sports an average P/E of 19.75. Over the past year, VREX's Forward P/E has been as high as 26.48 and as low as 11.49, with a median of 18.40.

Investors should also recognize that VREX has a P/B ratio of 1.08. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. VREX's current P/B looks attractive when compared to its industry's average P/B of 2.82. Over the past 12 months, VREX's P/B has been as high as 1.24 and as low as 0.50, with a median of 0.94.

Value investors also use the P/S ratio. The P/S ratio is calculated as price divided by sales. This is a preferred metric because revenue can't really be manipulated, so sales are often a truer performance indicator. VREX has a P/S ratio of 0.66. This compares to its industry's average P/S of 1.52.

Value investors will likely look at more than just these metrics, but the above data helps show that VAREX IMAGING is likely undervalued currently. And when considering the strength of its earnings outlook, VREX 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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