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While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.
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 a variety of methods, including tried-and-true valuation metrics, to find these stocks.
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 Ducommun (DCO). DCO is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock is trading with a P/E ratio of 16.11, which compares to its industry's average of 22.09. Over the past year, DCO's Forward P/E has been as high as 25.07 and as low as 6.41, with a median of 16.62.
Another valuation metric that we should highlight is DCO's P/B ratio of 1.41. 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 solid versus its industry's average P/B of 1.49. Over the past year, DCO's P/B has been as high as 2.25 and as low as 0.66, with a median of 1.58.
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. DCO has a P/S ratio of 0.61. This compares to its industry's average P/S of 1.24.
Finally, our model also underscores that DCO has a P/CF ratio of 7.44. 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 company's current P/CF looks solid when compared to its industry's average P/CF of 10.05. Within the past 12 months, DCO's P/CF has been as high as 11.79 and as low as 3.24, with a median of 7.99.
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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Ducommun Incorporated (DCO) : Free Stock Analysis Report
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