Is New Gold (NGD) a Great Value Stock Right Now?
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, 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 rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.
One stock to keep an eye on is New Gold (NGD). NGD is currently sporting a Zacks Rank of #2 (Buy) and an A for Value.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by 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. NGD has a P/S ratio of 1.46. This compares to its industry's average P/S of 3.95.
Finally, our model also underscores that NGD has a P/CF ratio of 7.39. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. NGD's P/CF compares to its industry's average P/CF of 10.50. NGD's P/CF has been as high as 8.15 and as low as -1.26, with a median of 2.37, all within the past year.
Value investors will likely look at more than just these metrics, but the above data helps show that New Gold is likely undervalued currently. And when considering the strength of its earnings outlook, NGD sticks out at as one of the market's strongest value stocks.
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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.