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Is American Outdoor Brands (AOBC) a Great Value Stock Right Now?

Zacks Equity Research

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.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.

One stock to keep an eye on is American Outdoor Brands (AOBC). AOBC is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. AOBC has a P/S ratio of 0.82. This compares to its industry's average P/S of 1.3.

Finally, our model also underscores that AOBC has a P/CF ratio of 7.36. 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. This company's current P/CF looks solid when compared to its industry's average P/CF of 28.70. Within the past 12 months, AOBC's P/CF has been as high as 8.88 and as low as 4.14, with a median of 6.36.

Value investors will likely look at more than just these metrics, but the above data helps show that American Outdoor Brands is likely undervalued currently. And when considering the strength of its earnings outlook, AOBC sticks out at as one of the market's strongest value stocks.


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