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Are Investors Undervaluing Norbord (OSB) Right Now?

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The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find 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 use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

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 value investors might notice is Norbord (OSB). OSB is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock has a Forward P/E ratio of 7.89. This compares to its industry's average Forward P/E of 18.52. Over the last 12 months, OSB's Forward P/E has been as high as 13.52 and as low as 6.90, with a median of 10.44.

Investors will also notice that OSB has a PEG ratio of 1.31. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. OSB's industry currently sports an average PEG of 2.42. Within the past year, OSB's PEG has been as high as 1.57 and as low as 0.81, with a median of 1.23.

Finally, investors will want to recognize that OSB has a P/CF ratio of 5.20. 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 company's current P/CF looks solid when compared to its industry's average P/CF of 16.97. OSB's P/CF has been as high as 9.80 and as low as 4.50, with a median of 6.08, all within the past year.

These are only a few of the key metrics included in Norbord's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, OSB looks like an impressive value stock at the moment.


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