Should Value Investors Buy Dow Inc. (DOW) Stock?
Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to...
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.
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.
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.
Dow Inc. (DOW) is a stock many investors are watching right now. DOW is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock holds a P/E ratio of 8.44, while its industry has an average P/E of 12.23. Over the past 52 weeks, DOW's Forward P/E has been as high as 23.05 and as low as 8.04, with a median of 14.
Investors should also note that DOW holds a PEG ratio of 0.29. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. DOW's industry currently sports an average PEG of 0.54. Over the last 12 months, DOW's PEG has been as high as 6.20 and as low as 0.29, with a median of 0.72.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by 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. DOW has a P/S ratio of 0.85. This compares to its industry's average P/S of 1.03.
Finally, investors will want to recognize that DOW has a P/CF ratio of 5.05. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 11.11. Within the past 12 months, DOW's P/CF has been as high as 81.12 and as low as 4.89, with a median of 10.29.
Value investors will likely look at more than just these metrics, but the above data helps show that Dow Inc. Is likely undervalued currently. And when considering the strength of its earnings outlook, DOW sticks out at as one of the market's strongest value stocks.
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