Looking for a Top Value Stock? 3 Reasons Why YRC Worldwide (YRCW) is an Excellent Choice
Many investors like to look for value in stocks, but this can be very tough to define. There is great debate regarding which metrics are the best to focus on in this regard, and which are not really quality indicators of future performance. Fortunately, with our new style score system we have identified the key statistics to pay close attention to and thus which stocks might be the best for value investors in the near term.
This method discovered several great candidates for value-oriented investors, but today let’s focus on YRC Worldwide Inc. ( YRCW) as this stock is looking especially impressive right now. And while there are numerous reasons why this is the case, we have highlighted three of the most vital reasons for YRCW’s status as a solid value stock below:
Price to Forward Sales for YRC Worldwide
One of the most underrated ratios for value investors is the price/forward sales metric. This ratio shows investors how much they are paying for each dollar of revenues generated. In other words, a lower number is better here while a price to sales ratio of 1 means that you are paying one dollar for each dollar in sales.
With a P/S ratio of 0.13, YRCW investors are paying 13 cents in stock price for each dollar of revenue generated by the company. Compare this to the industry average of 0.82, and it is safe to say that YRCW is undervalued compared to many of its peers on this important metric.
Price/Cash Flow for YRC Worldwide Stock
An often overlooked ratio that can still be a great indicator of value is the price/cash flow metric. This reading is preferred by some since it avoids amortization and depreciation concerns and can give a more accurate picture of the financial health in a business.
The P/CF ratio for YRCW comes in at 4.91, and since investors are generally looking for a reading under 20 here, this is pretty good news. Meanwhile, we should also point out that the industry average for this metric is 7.87, so YRC Worldwide has its peers beat in this regard too.
YRCW Earnings Estimate Revisions Moving in the Right Direction
The solid value ratios outlined in the preceding paragraphs might be enough for some investors, but we should also note that the earnings estimate revisions have been trending in a positive direction as well. Analysts who follow YRCW stock have been raising their estimates for the company lately, meaning that the EPS picture is looking a bit more favorably for YRC Worldwide now.
Over the past 30 days 3 earnings estimates have gone higher compared to 0 lower for the full year, while we are also seeing a similar trend in terms up: down revisions for the next year time frame too. These revisions have helped to boost the consensus estimate as 30 days ago YRCW was expected to post earnings of 24 cents per share for the full year though today it looks to have EPS of $1.04 for the full year.
Bottom Line
For the reasons detailed above, investors shouldn’t be surprised to read that we have YRCW as a stock with a Value Score of ‘A’ and a Zacks Rank #1 (Strong Buy). So if you are a value investor, definitely keep YRCW on your short list as this looks be a stock that is very well-positioned for gains in the near term.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
YRC WORLDWD INC (YRCW): Free Stock Analysis Report
To read this article on Zacks.com click here.
