Should Value Investors Buy Avanos Medical (AVNS) Stock?
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.
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.
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 value investors might notice is Avanos Medical (AVNS). AVNS is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock holds a P/E ratio of 16.26, while its industry has an average P/E of 32.58. Over the past year, AVNS's Forward P/E has been as high as 21.19 and as low as 11.84, with a median of 15.77.
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. AVNS has a P/S ratio of 1.6. This compares to its industry's average P/S of 3.92.
Finally, our model also underscores that AVNS has a P/CF ratio of 13.53. 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. AVNS's current P/CF looks attractive when compared to its industry's average P/CF of 21.27. AVNS's P/CF has been as high as 41.55 and as low as 10.78, with a median of 22.68, 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 Avanos Medical is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, AVNS feels like a great value stock at the moment.
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AVANOS MEDICAL, INC. (AVNS) : Free Stock Analysis Report
