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Should Value Investors Buy Owens & Minor (OMI) Stock?

Zacks Equity Research

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.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

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 to watch right now is Owens & Minor (OMI). OMI is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock is trading with P/E ratio of 13.87 right now. For comparison, its industry sports an average P/E of 27.15. Over the past 52 weeks, OMI's Forward P/E has been as high as 15.74 and as low as 3.82, with a median of 8.58.

We also note that OMI holds a PEG ratio of 1.67. 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. OMI's industry has an average PEG of 2.52 right now. Over the past 52 weeks, OMI's PEG has been as high as 3.44 and as low as 0.90, with a median of 1.35.

Another valuation metric that we should highlight is OMI's P/B ratio of 1.21. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. This stock's P/B looks attractive against its industry's average P/B of 3.12. Within the past 52 weeks, OMI's P/B has been as high as 1.39 and as low as 0.31, with a median of 0.79.

Finally, we should also recognize that OMI has a P/CF ratio of 5.74. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 20.54. Over the past year, OMI's P/CF has been as high as 6.57 and as low as 1.42, with a median of 3.65.

These figures are just a handful of the metrics value investors tend to look at, but they help show that Owens & Minor is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, OMI feels like a great value stock at the moment.


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