Should Value Investors Buy Modine (MOD) 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.
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 Modine (MOD). MOD is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock is trading with a P/E ratio of 7.33, which compares to its industry's average of 14.39. Over the last 12 months, MOD's Forward P/E has been as high as 9.68 and as low as 4.86, with a median of 7.62.
Investors should also note that MOD holds a PEG ratio of 0.73. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. MOD's PEG compares to its industry's average PEG of 1.65. Within the past year, MOD's PEG has been as high as 0.84 and as low as 0.49, with a median of 0.73.
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. MOD has a P/S ratio of 0.21. This compares to its industry's average P/S of 0.45.
Finally, investors will want to recognize that MOD has a P/CF ratio of 4.66. 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. MOD's current P/CF looks attractive when compared to its industry's average P/CF of 7.78. Over the past 52 weeks, MOD's P/CF has been as high as 5.77 and as low as 3.27, with a median of 4.33.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Modine is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, MOD feels like a great value stock at the moment.
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