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Is Orix (IX) a Great Value Stock Right Now?

Zacks Equity Research

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.

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.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

One company to watch right now is Orix (IX). IX is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock holds a P/E ratio of 6.21, while its industry has an average P/E of 9.78. IX's Forward P/E has been as high as 7.03 and as low as 5.40, with a median of 6, all within the past year.

Investors will also notice that IX has a PEG ratio of 0.86. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. IX's PEG compares to its industry's average PEG of 1.11. Within the past year, IX's PEG has been as high as 0.98 and as low as 0.76, with a median of 0.83.

Another notable valuation metric for IX is its P/B ratio of 0.74. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. This company's current P/B looks solid when compared to its industry's average P/B of 1.84. Over the past year, IX's P/B has been as high as 0.83 and as low as 0.65, with a median of 0.73.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. IX has a P/S ratio of 0.95. This compares to its industry's average P/S of 1.64.

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


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