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Should Value Investors Buy BMC (BMCH) Stock?

Zacks Equity Research

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 tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

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.

One company to watch right now is BMC (BMCH). BMCH is currently sporting a Zacks Rank of #1 (Strong Buy), as well as a Value grade of A. The stock holds a P/E ratio of 12.13, while its industry has an average P/E of 18.38. BMCH's Forward P/E has been as high as 14.45 and as low as 8.47, with a median of 11.49, all within the past year.

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 prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. BMCH has a P/S ratio of 0.38. This compares to its industry's average P/S of 0.49.

Finally, investors should note that BMCH has a P/CF ratio of 7.17. 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. BMCH's P/CF compares to its industry's average P/CF of 13.11. Over the past year, BMCH's P/CF has been as high as 10.60 and as low as 5.62, with a median of 6.93.

These are just a handful of the figures considered in BMC'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 BMCH is an impressive value stock right now.


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