Should Value Investors Buy DHI Group (DHX) Stock?
Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.
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.
One company value investors might notice is DHI Group (DHX). DHX 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 8.04, while its industry has an average P/E of 21.29. Over the past year, DHX's Forward P/E has been as high as 15.31 and as low as 5.67, with a median of 9.96.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. DHX has a P/S ratio of 0.59. This compares to its industry's average P/S of 1.71.
Finally, investors will want to recognize that DHX has a P/CF ratio of 3.70. 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. DHX's P/CF compares to its industry's average P/CF of 9.49. Over the past year, DHX's P/CF has been as high as 4.99 and as low as 2.01, with a median of 3.28.
Value investors will likely look at more than just these metrics, but the above data helps show that DHI Group is likely undervalued currently. And when considering the strength of its earnings outlook, DHX sticks out at as one of the market's strongest value stocks.
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