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.
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 fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.
One company value investors might notice is Cardinal Health (CAH). CAH is currently sporting a Zacks Rank #2 (Buy) and an A for Value. The stock is trading with P/E ratio of 15.48 right now. For comparison, its industry sports an average P/E of 15.74. Over the past 52 weeks, CAH's Forward P/E has been as high as 20.15 and as low as 13.69, with a median of 15.30.
CAH is also sporting a PEG ratio of 1.24. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. CAH's industry currently sports an average PEG of 1.81. Over the past 52 weeks, CAH's PEG has been as high as 1.88 and as low as 1.22, with a median of 1.49.
Finally, our model also underscores that CAH has a P/CF ratio of 15.27. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 16.55. Within the past 12 months, CAH's P/CF has been as high as 17.47 and as low as 12.96, with a median of 15.12.
These are just a handful of the figures considered in Cardinal Health'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 CAH is an impressive value stock right now.
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Cardinal Health, Inc. (CAH): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).