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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.
Hawkins (HWKN) is a stock many investors are watching right now. HWKN 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 13.21, while its industry has an average P/E of 21.29. HWKN's Forward P/E has been as high as 15.09 and as low as 11.28, with a median of 12.71, all within the past year.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. HWKN has a P/S ratio of 0.8. This compares to its industry's average P/S of 1.41.
Finally, we should also recognize that HWKN has a P/CF ratio of 8.30. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 28.24. HWKN's P/CF has been as high as 10.68 and as low as 6.08, with a median of 9.19, all within the past year.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Hawkins is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, HWKN feels like a great value stock at the moment.
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