Are Investors Undervaluing Owens Corning (OC) Right Now?

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.

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 to watch right now is Owens Corning (OC). OC is currently sporting a Zacks Rank #2 (Buy), as well as a Value grade of A. The stock is trading with P/E ratio of 10.24 right now. For comparison, its industry sports an average P/E of 17.54. OC's Forward P/E has been as high as 13.40 and as low as 8.54, with a median of 10.70, all within the past year.

Another valuation metric that we should highlight is OC's P/B ratio of 2.38. 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 stock's P/B looks attractive against its industry's average P/B of 6.24. Over the past 12 months, OC's P/B has been as high as 3.23 and as low as 2.19, with a median of 2.51.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. OC has a P/S ratio of 1.18. This compares to its industry's average P/S of 1.44.

Finally, we should also recognize that OC has a P/CF ratio of 11.93. 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. This company's current P/CF looks solid when compared to its industry's average P/CF of 15.14. Over the past 52 weeks, OC's P/CF has been as high as 13.25 and as low as 8.85, with a median of 11.70.

These are just a handful of the figures considered in Owens Corning'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 OC is an impressive value stock right now.

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

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