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Are Investors Undervaluing Ducommun (DCO) Right Now?

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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 rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

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.

One company to watch right now is Ducommun (DCO). DCO is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock is trading with a P/E ratio of 13.74, which compares to its industry's average of 21.92. DCO's Forward P/E has been as high as 25.07 and as low as 6.41, with a median of 16.52, all within the past year.

Another notable valuation metric for DCO is its P/B ratio of 1.21. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. This stock's P/B looks attractive against its industry's average P/B of 1.49. Over the past 12 months, DCO's P/B has been as high as 2.25 and as low as 0.66, with a median of 1.51.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. DCO has a P/S ratio of 0.54. This compares to its industry's average P/S of 1.2.

Finally, investors should note that DCO has a P/CF ratio of 6.38. 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. This stock's P/CF looks attractive against its industry's average P/CF of 10.05. DCO's P/CF has been as high as 11.79 and as low as 3.24, with a median of 7.72, all within the past year.

These are just a handful of the figures considered in Ducommun's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that DCO is an impressive value stock right now.


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