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Is Orix (IX) Stock Undervalued Right Now?

Zacks Equity Research

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.

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.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

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 5.49, while its industry has an average P/E of 10.32. IX's Forward P/E has been as high as 8.30 and as low as 5.43, with a median of 6.73, all within the past year.

We also note that IX holds a PEG ratio of 0.77. 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 industry has an average PEG of 1.19 right now. IX's PEG has been as high as 1.04 and as low as 0.76, with a median of 0.93, all within the past year.

Investors should also recognize that IX has a P/B ratio of 0.73. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. IX's current P/B looks attractive when compared to its industry's average P/B of 1.82. Over the past year, IX's P/B has been as high as 0.94 and as low as 0.67, with a median of 0.80.

Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. IX has a P/S ratio of 0.81. This compares to its industry's average P/S of 1.86.

Finally, we should also recognize that IX has a P/CF ratio of 3.39. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 6.95. IX's P/CF has been as high as 45.75 and as low as 3.34, with a median of 38.57, all within the past year.

These are just a handful of the figures considered in Orix's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that IX is an impressive value stock right now.

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