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Are Investors Undervaluing Qudian (QD) Right Now?

Zacks Equity Research

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.

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

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.

One company to watch right now is Qudian (QD). QD 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 2.50, which compares to its industry's average of 7.11. Over the past year, QD's Forward P/E has been as high as 4.27 and as low as 0.43, with a median of 3.33.

Finally, investors will want to recognize that QD has a P/CF ratio of 3.55. 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 4.45. QD's P/CF has been as high as 5.90 and as low as 3.30, with a median of 4.44, all within the past year.

Value investors will likely look at more than just these metrics, but the above data helps show that Qudian is likely undervalued currently. And when considering the strength of its earnings outlook, QD sticks out at as one of the market's strongest value stocks.

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