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Should Value Investors Buy SMART Global Holdings, Inc. (SGH) Stock?

·2 min 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 a variety of methods, including tried-and-true valuation metrics, to find these stocks.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

One company value investors might notice is SMART Global Holdings, Inc. (SGH). SGH is currently sporting a Zacks Rank of #1 (Strong Buy) and an A for Value. The stock is trading with a P/E ratio of 9.15, which compares to its industry's average of 21.11. SGH's Forward P/E has been as high as 14.73 and as low as 7.12, with a median of 9.60, all within the past year.

Another valuation metric that we should highlight is SGH's P/B ratio of 4.07. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. SGH's current P/B looks attractive when compared to its industry's average P/B of 11.22. Over the past year, SGH's P/B has been as high as 5.42 and as low as 2.10, with a median of 3.96.

Finally, our model also underscores that SGH has a P/CF ratio of 16.30. 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. SGH's P/CF compares to its industry's average P/CF of 30.01. Over the past year, SGH's P/CF has been as high as 25.67 and as low as 13.20, with a median of 17.69.

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

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