For Immediate Release
Chicago, IL – October 11, 2018 - Stocks in this week’s article are ArcBest Corp. ARCB, American Axle & Manufacturing Holdings, Inc. AXL, MetLife, Inc. MET and Prudential Financial, Inc. PRU.
Unlock the Value of Your Portfolio with 4 Low P/CF Stocks
Investors always try to hit the jackpot while picking stocks. But striking the right chord each time is not easy unless you are blessed with Midas touch.
When it comes to the investment market, experts consider value style as one of the most effective approaches. In value investing, investors pick stocks that are cheap but fundamentally sound. So, the chance of outperformance is high when the market moves higher.
There are different valuation metrics to determine a stock’s inherent strength but a random selection of ratios cannot serve your purpose if you want a realistic assessment of a company’s financial position. For this, we recommend Price to Cash Flow (or P/CF) as one of the key metrics. This metric evaluates the market price of a stock relative to the amount of cash flow that the company is generating on a per share basis – the lower the number, the better.
Price to Cash Flow Reveals Financial Health
Questions may arise as to why we are considering the Price to Cash Flow valuation metric, when the most widely used metric is Price/Earnings (or P/E). Well, what makes P/CF stand out is that operating cash flow adds back non-cash charges such as depreciation and amortization to net income, truly reflecting the financial health of a company.
Analysts caution that a company’s earnings are subject to accounting estimates and management manipulation. However, cash flow is reliable. It is net cash flow that reveals how much money a company is actually generating and how effectively management is putting the same to use.
A positive cash flow indicates an increase in the company’s liquid assets. This gives the company the means to settle debt, shell out for its expenses, reinvest in its business, endure downturns and finally pay back its shareholders. Then again, a negative cash flow implies a decline in the company’s liquidity, which in turn lowers its flexibility to support these moves.
For the rest of this Screen of the Week article please visit Zacks.com at: https://www.zacks.com/stock/news/327063/unlock-the-value-of-your-portfolio-with-4-low-pcf-stocks
Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.
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ArcBest Corporation (ARCB) : Free Stock Analysis Report
American Axle & Manufacturing Holdings, Inc. (AXL) : Free Stock Analysis Report
MetLife, Inc. (MET) : Free Stock Analysis Report
Prudential Financial, Inc. (PRU) : Free Stock Analysis Report
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