Should Value Investors Buy TreeHouse Foods (THS) Stock?
Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.
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.
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 value investors might notice is TreeHouse Foods (THS). THS is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock is trading with a P/E ratio of 16.46, which compares to its industry's average of 16.50. Over the last 12 months, THS's Forward P/E has been as high as 20.48 and as low as 13.41, with a median of 17.35.
Another notable valuation metric for THS is its P/B ratio of 1.39. 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. This company's current P/B looks solid when compared to its industry's average P/B of 2.17. Over the past 12 months, THS's P/B has been as high as 1.79 and as low as 1.27, with a median of 1.52.
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. THS has a P/S ratio of 0.57. This compares to its industry's average P/S of 0.91.
Finally, investors should note that THS has a P/CF ratio of 14.63. 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. This stock's P/CF looks attractive against its industry's average P/CF of 16.10. Over the past year, THS's P/CF has been as high as 85.40 and as low as -2,197.53, with a median of 14.03.
Value investors will likely look at more than just these metrics, but the above data helps show that TreeHouse Foods is likely undervalued currently. And when considering the strength of its earnings outlook, THS sticks out at as one of the market's strongest value stocks.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
TreeHouse Foods, Inc. (THS) : Free Stock Analysis Report
