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Should Value Investors Buy Owens Corning (OC) Stock?

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Zacks Equity Research
·3 min read
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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.

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 rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

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 Owens Corning (OC). OC is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock is trading with a P/E ratio of 13.65, which compares to its industry's average of 21.01. OC's Forward P/E has been as high as 19.95 and as low as 6, with a median of 14.19, all within the past year.

OC is also sporting a PEG ratio of 1.24. 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. OC's PEG compares to its industry's average PEG of 1.83. Over the last 12 months, OC's PEG has been as high as 4.73 and as low as 0.57, with a median of 1.54.

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 prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. OC has a P/S ratio of 1.23. This compares to its industry's average P/S of 1.91.

Finally, investors will want to recognize that OC has a P/CF ratio of 9.34. 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. OC's P/CF compares to its industry's average P/CF of 16.63. Within the past 12 months, OC's P/CF has been as high as 10.38 and as low as 3.98, with a median of 8.13.

Value investors will likely look at more than just these metrics, but the above data helps show that Owens Corning is likely undervalued currently. And when considering the strength of its earnings outlook, OC sticks out at as one of the market's strongest value stocks.


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