Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn't want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let's put Ingredion IncorporatedINGR stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock's current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Ingredion Incorporated has a trailing twelve months PE ratio of 15.88, as you can see in the chart below:
We should also point out that Ingredion Incorporated has a forward PE ratio (price relative to this year's earnings) of just 15.02, so it is fair to say that a slightly more value-oriented path may be ahead for Apple stock in the near term too.
Another key metric to note is the Price/Sales ratio. This approach compares a given stock's price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Ingredion Incorporated has a P/S ratio of about 1.46. This is significantly lower than the S&P 500 average, which comes in at 3.14 right now. Also, as we can see in the chart below, this is well below the highs for this stock in particular over the past few years.
Broad Value Outlook
In aggregate, Ingredion Incorporated currently has a Zacks Value Style Score of 'A', putting it into the top 20% of all stocks we cover from this look. This makes Ingredion Incorporated a solid choice for value investors, and some of its other key metrics make this pretty clear too.
For example, the PEG ratio for Ingredion Incorporated is just 1.37, a level that is lower than the industry average of 2.38. Clearly, INGR is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though Ingredion Incorporated might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of 'B' and a Momentum score of 'C'. This gives INGR a Zacks VGM score-or its overarching fundamental grade-of 'A'. (You can read more about the Zacks Style Scores here >> )
Meanwhile, the company's recent earnings estimates have been dismal. Both the current quarter and full year has seen one estimate move south in the last two months, compared to no movements in the opposite direction.
This has had just a significant impact on the consensus estimate as the current quarter consensus estimate has declined 1.6% in the past two months, while the full year estimate has inched lower by 0.3%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Ingredion Incorporated Price and Consensus
The stock has a Zacks Rank #3 (Hold) and we are looking for in-line performance from the company in the near term.
Ingredion Incorporated is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. However, with a sluggish industry rank (among Bottom 24% of more than 250 industries) and a Zacks Rank #3, it is hard to get too excited about this company overall. In fact, over the past two years, the Zacks Food - Miscellaneous industry has clearly underperformed the broader market, as you can see below:
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.