Should Value Investors Buy Hillenbrand (HI) 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...
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.
Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
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 to watch right now is Hillenbrand (HI). HI is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock is trading with P/E ratio of 13.28 right now. For comparison, its industry sports an average P/E of 19.18. HI's Forward P/E has been as high as 14.85 and as low as 11.18, with a median of 12.76, all within the past year.
Investors will also notice that HI has a PEG ratio of 1.11. 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. HI's industry currently sports an average PEG of 2.11. HI's PEG has been as high as 1.24 and as low as 0.93, with a median of 1.06, all within the past year.
Another notable valuation metric for HI is its P/B ratio of 3.05. 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. HI's current P/B looks attractive when compared to its industry's average P/B of 4.78. Over the past 12 months, HI's P/B has been as high as 3.21 and as low as 2.39, with a median of 2.73.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. HI has a P/S ratio of 1.32. This compares to its industry's average P/S of 2.07.
Finally, our model also underscores that HI has a P/CF ratio of 10.25. 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. HI's current P/CF looks attractive when compared to its industry's average P/CF of 11.60. Within the past 12 months, HI's P/CF has been as high as 39.96 and as low as 8.50, with a median of 11.11.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Hillenbrand is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, HI feels like a great value stock at the moment.
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