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Are Investors Undervaluing Owens Corning (OC) Right Now?

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Zacks Equity Research
·3 min read
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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.

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 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 stock to keep an eye on is Owens Corning (OC). OC is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock has a Forward P/E ratio of 13.62. This compares to its industry's average Forward P/E of 17.53. Over the past 52 weeks, OC's Forward P/E has been as high as 19.95 and as low as 6, with a median of 13.62.

We also note that OC holds a PEG ratio of 1.29. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. OC's PEG compares to its industry's average PEG of 1.53. OC's PEG has been as high as 4.73 and as low as 0.57, with a median of 1.76, all within the past year.

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. OC has a P/S ratio of 1.14. This compares to its industry's average P/S of 1.48.

Finally, our model also underscores that OC has a P/CF ratio of 8.74. 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 16.63. Within the past 12 months, OC's P/CF has been as high as 9.04 and as low as 3.98, with a median of 7.81.

These figures are just a handful of the metrics value investors tend to look at, but they help show that Owens Corning is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, OC feels like a great value stock at the moment.


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Zacks Investment Research