Are Investors Undervaluing United Rentals (URI) Right Now?
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.
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 tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
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 value investors might notice is United Rentals (URI). URI is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock holds a P/E ratio of 14.28, while its industry has an average P/E of 15.90. URI's Forward P/E has been as high as 17.45 and as low as 10.71, with a median of 14.35, all within the past year.
Investors should also note that URI holds a PEG ratio of 0.93. 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. URI's industry has an average PEG of 1.01 right now. URI's PEG has been as high as 2.35 and as low as 0.89, with a median of 1.11, all within the past year.
Finally, investors should note that URI has a P/CF ratio of 8.75. 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 stock's P/CF looks attractive against its industry's average P/CF of 19.10. Over the past year, URI's P/CF has been as high as 9.09 and as low as 4.16, with a median of 7.82.
Value investors will likely look at more than just these metrics, but the above data helps show that United Rentals is likely undervalued currently. And when considering the strength of its earnings outlook, URI sticks out at as one of the market's strongest value stocks.
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