Are Investors Undervaluing Newell Brands (NWL) Right Now?
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.
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.
Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.
Newell Brands (NWL) is a stock many investors are watching right now. NWL is currently holding a Zacks Rank of #1 (Strong Buy) and a Value grade of A. The stock is trading with P/E ratio of 11.73 right now. For comparison, its industry sports an average P/E of 17.69. Over the past year, NWL's Forward P/E has been as high as 13.22 and as low as 6.58, with a median of 10.11.
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. NWL has a P/S ratio of 0.43. This compares to its industry's average P/S of 0.78.
Finally, investors will want to recognize that NWL has a P/CF ratio of 10.14. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 25.27. Within the past 12 months, NWL's P/CF has been as high as 10.25 and as low as 4.87, with a median of 7.83.
Investors could also keep in mind Yatsen (YSG), an Consumer Products - Staples stock with a Zacks Rank of # 2 (Buy) and Value grade of A.
Yatsen sports a P/B ratio of 0.45 as well; this compares to its industry's price-to-book ratio of 4.04. In the past 52 weeks, YSG's P/B has been as high as 0.99, as low as 0.44, with a median of 0.60.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Newell Brands and Yatsen are likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, NWL and YSG feels like a great value stock at the moment.
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Newell Brands Inc. (NWL) : Free Stock Analysis Report
Yatsen Holding Limited Sponsored ADR (YSG) : Free Stock Analysis Report
