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Should Value Investors Buy Seagate (STX) Stock?

Zacks Equity Research
·2 mins read

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, 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.

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.

Seagate (STX) is a stock many investors are watching right now. STX is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock is trading with P/E ratio of 9.82 right now. For comparison, its industry sports an average P/E of 17.52. STX's Forward P/E has been as high as 12.66 and as low as 7.40, with a median of 10.12, all within the past year.

Finally, investors should note that STX has a P/CF ratio of 6. 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. This company's current P/CF looks solid when compared to its industry's average P/CF of 14.34. Within the past 12 months, STX's P/CF has been as high as 7.79 and as low as 4.84, with a median of 6.12.

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


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