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 rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
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 stock to keep an eye on is American Woodmark (AMWD). AMWD is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock holds a P/E ratio of 13.34, while its industry has an average P/E of 14.71. AMWD’s Forward P/E has been as high as 13.39 and as low as 7.01, with a median of 10.88, all within the past year.
Another valuation metric that we should highlight is AMWD’s P/B ratio of 2.73. The P/B is a method of comparing a stock’s market value to its book value, which is defined as total assets minus total liabilities. This company’s current P/B looks solid when compared to its industry’s average P/B of 4.01. Over the past year, AMWD’s P/B has been as high as 2.74 and as low as 1.51, with a median of 2.24.
Finally, investors should note that AMWD has a P/CF ratio of 9.38. 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. AMWD’s current P/CF looks attractive when compared to its industry’s average P/CF of 12.70. Within the past 12 months, AMWD’s P/CF has been as high as 9.41 and as low as 6.40, with a median of 7.90.
These figures are just a handful of the metrics value investors tend to look at, but they help show that American Woodmark is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, AMWD feels like a great value stock at the moment.
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