For Immediate Release
Chicago, IL – May 10, 2023 – Stocks in this week’s article are Unum Group UNM, General Motors Co. GM, Park Hotels & Resorts Inc. PK and PVH Corp. PVH.
These 4 Low Price-to-Cash-Flow Stocks Have Winning Potential
Value style is considered one of the best practices when it comes to picking stocks. Value investing is essentially about selecting stocks that are fundamentally sound but have been beaten down by some external factors. Such stocks are poised to bounce back as and when investors recognize the inherent value of companies. Certainly, the value investment strategy best suits investors with a long-term horizon.
There are different valuation metrics to determine a stock's inherent strength. Still, a random selection of a ratio cannot serve your purpose if you want a realistic assessment of a company's financial position. For this, the Price to Cash Flow (or P/CF) ratio is one of the key metrics. Unum Group, General Motors Co., Park Hotels & Resorts Inc. and PVH Corp. boast a low P/CF ratio.
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. One of the important factors that makes P/CF a highly dependable metric is that operating cash flow adds back non-cash charges such as depreciation and amortization to net income, truly diagnosing a company's financial health.
Analysts caution that a company's earnings are subject to accounting estimates and management manipulation. However, cash flow is reliable. Net cash flow unveils how much money a company is actually generating and how effectively management is deploying the same.
Positive cash flow indicates an increase in a company's liquid assets. It gives the company the means to settle debt, meet its expenses, reinvest in its business, endure downturns and finally pay back its shareholders. Negative cash flow implies a decline in the company's liquidity, which in turn lowers its flexibility to support these moves.
However, solely based on the P/CF metric, an investment decision may not fetch the desired results. To identify stocks trading at a discount, you should expand your search criteria and consider the price-to-book ratio, price-to-earnings ratio and price-to-sales ratio. Adding a favorable Zacks Rank and a Value Score of A or B to your search criteria should lead to even better results as these eliminate the chance of falling into a value trap.
Here are four of the 11 stocks that qualified the screening:
Unum Group, which provides financial protection benefit solutions, sports a Zacks Rank #1 and has an expected EPS growth rate of 9.1% for three-five years. The company has a trailing four-quarter earnings surprise of 18.6%, on average. You can see the complete list of today's Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Unum Group's current financial year sales and EPS suggests growth of 2.6% and 11.8%, respectively, from the year-ago period. Unum Group has a Value Score of A. Shares of UNM have gained 26.9% in the past year.
General Motors, which designs, builds, and sells cars, trucks, crossovers, and automobile parts globally, flaunts a Zacks Rank #1. It has an expected EPS growth rate of 9.9% for three-five years. The company has a trailing four-quarter earnings surprise of 15.5%, on average.
The Zacks Consensus Estimate for General Motors' current financial year sales suggests growth of 4.4% from the year-ago period. General Motors has a Value Score of A. Shares of GM have declined 13% in the past year.
Park Hotels & Resorts, one of the largest publicly-traded lodging REITs with a diverse portfolio of iconic and market-leading hotels and resorts, carries a Zacks Rank #2. PK has a Value Score of A and an expected EPS growth rate of 9.3% for three-five years.
Park Hotels & Resorts has a trailing four-quarter earnings surprise of 15.7%, on average. The Zacks Consensus Estimate for current financial year sales and EPS suggests growth of 9% and 30.5%, respectively, from the year-ago period. Shares of PK have fallen 30.2% in the past year.
PVH Corp., which operates as an apparel company, carries a Zacks Rank #2 and has an expected EPS growth rate of 16.1% for three-five years. The company has a trailing four-quarter earnings surprise of 23.4%, on average.
The Zacks Consensus Estimate for PVH's current financial year sales and EPS suggests growth of 3.7% and 11.8%, respectively, from the year-ago period. PVH has a Value Score of A. Shares of PVH have gained 25.3% in the past year.
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For the rest of this Screen of the Week article please visit Zacks.com at: https://www.zacks.com/stock/news/2092405/these-4-low-price-to-cash-flow-stocks-have-winning-potential
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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