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.
Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
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 stock to keep an eye on is Owens Corning (OC). OC is currently sporting a Zacks Rank #1 (Strong 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 15.95. Over the past 52 weeks, OC's Forward P/E has been as high as 13.40 and as low as 8.54, with a median of 10.70.
Investors should also recognize that OC has a P/B ratio of 2.38. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. OC's current P/B looks attractive when compared to its industry's average P/B of 5.69. Within the past 52 weeks, 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 frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. OC has a P/S ratio of 0.99. This compares to its industry's average P/S of 1.27.
Finally, investors should note 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 stock's P/CF looks attractive against its industry's average P/CF of 13.84. OC's P/CF has been as high as 13.25 and as low as 8.85, with a median of 11.70, all within the past year.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Owens Corning is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, OC feels like a great value stock at the moment.
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Owens Corning Inc (OC): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).