Should Value Investors Buy Harte Hanks (HHS) 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.
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 stock to keep an eye on is Harte Hanks (HHS). HHS is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock is trading with a P/E ratio of 6.50, which compares to its industry's average of 8.71. Over the past year, HHS's Forward P/E has been as high as 11.65 and as low as 4.25, with a median of 6.94.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by 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. HHS has a P/S ratio of 0.41. This compares to its industry's average P/S of 0.82.
Finally, our model also underscores that HHS has a P/CF ratio of 5.03. 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. HHS's current P/CF looks attractive when compared to its industry's average P/CF of 9.52. Over the past year, HHS's P/CF has been as high as 7.98 and as low as 2.38, with a median of 3.27.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Harte Hanks is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, HHS feels like a great value stock at the moment.
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