Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.
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 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.
Churchill Downs (CHDN) is a stock many investors are watching right now. CHDN is currently sporting a Zacks Rank #2 (Buy), as well as a Value grade of A. The stock holds a P/E ratio of 14.21, while its industry has an average P/E of 23.31. Over the past 52 weeks, CHDN's Forward P/E has been as high as 22.77 and as low as 12.94, with a median of 16.51.
Investors will also notice that CHDN has a PEG ratio of 1.63. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. CHDN's industry currently sports an average PEG of 1.63. CHDN's PEG has been as high as 3.70 and as low as 1.63, with a median of 2.57, all within the past year.
Another valuation metric that we should highlight is CHDN's P/B ratio of 6.42. 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. CHDN's current P/B looks attractive when compared to its industry's average P/B of 8.94. Over the past 12 months, CHDN's P/B has been as high as 10.03 and as low as 5.93, with a median of 7.60.
Finally, our model also underscores that CHDN has a P/CF ratio of 10.49. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. CHDN's current P/CF looks attractive when compared to its industry's average P/CF of 23.78. Within the past 12 months, CHDN's P/CF has been as high as 18 and as low as 10.22, with a median of 13.14.
These are just a handful of the figures considered in Churchill Downs'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 CHDN is an impressive value stock right now.
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Churchill Downs, Incorporated (CHDN): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).