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Should Value Investors Buy MasterCraft Boat Holdings, Inc. (MCFT) Stock?

Zacks Equity Research
IBM (IBM) delivered earnings and revenue surprises of 3.59% and 0.25%, respectively, for the quarter ended June 2019. Do the numbers hold clues to what lies ahead for the 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, value investing is easily one of the most popular ways to find great stocks in any market environment. 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 stock to keep an eye on is MasterCraft Boat Holdings, Inc. (MCFT). MCFT is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock is trading with P/E ratio of 6.98 right now. For comparison, its industry sports an average P/E of 13.16. Over the past 52 weeks, MCFT's Forward P/E has been as high as 15.89 and as low as 6.15, with a median of 9.16.

We also note that MCFT holds a PEG ratio of 0.70. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. MCFT's PEG compares to its industry's average PEG of 0.89. MCFT's PEG has been as high as 1.06 and as low as 0.41, with a median of 0.66, 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 popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. MCFT has a P/S ratio of 0.9. This compares to its industry's average P/S of 1.28.

Finally, investors will want to recognize that MCFT has a P/CF ratio of 7.83. 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. This company's current P/CF looks solid when compared to its industry's average P/CF of 13.74. MCFT's P/CF has been as high as 16.47 and as low as 6.72, with a median of 10.22, 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 MasterCraft Boat Holdings, Inc. Is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, MCFT feels like a great value stock at the moment.


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