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Is Quanex Building Products (NX) a Great Value Stock Right Now?

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·2 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.

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.

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.

Quanex Building Products (NX) is a stock many investors are watching right now. NX is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock holds a P/E ratio of 16.03, while its industry has an average P/E of 20.33. NX's Forward P/E has been as high as 23.21 and as low as 8.37, with a median of 16.70, all within the past year.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. NX has a P/S ratio of 0.94. This compares to its industry's average P/S of 1.91.

Finally, investors will want to recognize that NX has a P/CF ratio of 9. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. NX's P/CF compares to its industry's average P/CF of 16.63. NX's P/CF has been as high as 10.12 and as low as 3.03, with a median of 5.47, all within the past year.

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


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