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Is Greenbrier Companies (GBX) a Great Value Stock Right Now?

Zacks Equity Research

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 latest value, growth, and momentum trends to underscore strong picks.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of 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.

One stock to keep an eye on is Greenbrier Companies (GBX). GBX 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 7.53, while its industry has an average P/E of 11.04. Over the last 12 months, GBX's Forward P/E has been as high as 15.76 and as low as 7.06, with a median of 9.97.

We also note that GBX holds a PEG ratio of 0.79. 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. GBX's PEG compares to its industry's average PEG of 1.05. Within the past year, GBX's PEG has been as high as 1.66 and as low as 0.74, with a median of 1.05.

Another notable valuation metric for GBX is its P/B ratio of 0.67. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. GBX's current P/B looks attractive when compared to its industry's average P/B of 1.11. Over the past 12 months, GBX's P/B has been as high as 1.50 and as low as 0.63, with a median of 1.02.

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. GBX has a P/S ratio of 0.36. This compares to its industry's average P/S of 0.98.

Finally, investors should note that GBX has a P/CF ratio of 5.76. 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. GBX's P/CF compares to its industry's average P/CF of 5.99. GBX's P/CF has been as high as 9.23 and as low as 5.39, with a median of 7.01, all within the past year.

These are only a few of the key metrics included in Greenbrier Companies's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, GBX looks like an impressive value stock at the moment.


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