Should Value Investors Buy American Woodmark (AMWD) Stock?
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.
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 fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.
One company value investors might notice is American Woodmark (AMWD). AMWD is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock has a Forward P/E ratio of 10.64. This compares to its industry's average Forward P/E of 16.82. Over the past year, AMWD's Forward P/E has been as high as 15.42 and as low as 6.62, with a median of 8.30.
Another valuation metric that we should highlight is AMWD's P/B ratio of 1.18. Investors use the P/B ratio to look at a stock's market value versus 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 3.39. Within the past 52 weeks, AMWD's P/B has been as high as 1.33 and as low as 0.88, with a median of 1.05.
Finally, investors should note that AMWD has a P/CF ratio of 8.84. 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. AMWD's P/CF compares to its industry's average P/CF of 9.72. Within the past 12 months, AMWD's P/CF has been as high as 17.45 and as low as 6.59, with a median of 9.90.
Value investors will likely look at more than just these metrics, but the above data helps show that American Woodmark is likely undervalued currently. And when considering the strength of its earnings outlook, AMWD sticks out at as one of the market's strongest value stocks.
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