Is Owens Corning (OC) a Great Value Stock Right Now?
Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Neverthe...
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.
Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
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.
One company value investors might notice is Owens Corning (OC). OC is currently sporting a Zacks Rank of #1 (Strong Buy), as well as a Value grade of A. The stock is trading with P/E ratio of 10.44 right now. For comparison, its industry sports an average P/E of 17.79. Over the past 52 weeks, OC's Forward P/E has been as high as 15.91 and as low as 10.06, with a median of 13.50.
Investors will also notice that OC has a PEG ratio of 0.74. 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. OC's industry has an average PEG of 1.13 right now. Within the past year, OC's PEG has been as high as 3.77 and as low as 0.73, with a median of 1.28.
Another valuation metric that we should highlight is OC's P/B ratio of 2.37. 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. OC's current P/B looks attractive when compared to its industry's average P/B of 4.24. OC's P/B has been as high as 2.85 and as low as 1.81, with a median of 2.31, over the past year.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. OC has a P/S ratio of 1.2. This compares to its industry's average P/S of 1.88.
Finally, we should also recognize that OC has a P/CF ratio of 6.95. 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. OC's P/CF compares to its industry's average P/CF of 21.04. Within the past 12 months, OC's P/CF has been as high as 9.36 and as low as 6.58, with a median of 8.31.
Value investors will likely look at more than just these metrics, but the above data helps show that Owens Corning is likely undervalued currently. And when considering the strength of its earnings outlook, OC sticks out at as one of the market's strongest value stocks.
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