Are Investors Undervaluing BMC (BMCH) Right Now?
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.
Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.
BMC (BMCH) is a stock many investors are watching right now. BMCH is currently sporting a Zacks Rank of #1 (Strong Buy) and an A for Value. The stock has a Forward P/E ratio of 14.52. This compares to its industry's average Forward P/E of 21.97. Over the last 12 months, BMCH's Forward P/E has been as high as 22.37 and as low as 7.19, with a median of 14.51.
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. BMCH has a P/S ratio of 0.58. This compares to its industry's average P/S of 0.61.
Finally, investors should note that BMCH has a P/CF ratio of 11.20. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. BMCH's P/CF compares to its industry's average P/CF of 15.41. Over the past year, BMCH's P/CF has been as high as 11.58 and as low as 5.63, with a median of 9.24.
Value investors will likely look at more than just these metrics, but the above data helps show that BMC is likely undervalued currently. And when considering the strength of its earnings outlook, BMCH sticks out at as one of the market's strongest value stocks.
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