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Should Value Investors Buy Steelcase (SCS) Stock?

Zacks Equity Research

The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find 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 use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

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 Steelcase (SCS). SCS is currently sporting a Zacks Rank of #1 (Strong Buy), as well as an A grade for Value.

Investors should also recognize that SCS has a P/B ratio of 2.39. 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 3.21. SCS's P/B has been as high as 2.52 and as low as 1.93, with a median of 2.30, over the past year.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. SCS has a P/S ratio of 0.58. This compares to its industry's average P/S of 0.8.

Finally, we should also recognize that SCS has a P/CF ratio of 9.81. 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. SCS's current P/CF looks attractive when compared to its industry's average P/CF of 11.66. SCS's P/CF has been as high as 12.58 and as low as 8.29, with a median of 9.80, all within the past year.

These are only a few of the key metrics included in Steelcase's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, SCS looks like an impressive value stock at the moment.


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