Should Value Investors Buy American Outdoor Brands (AOBC) Stock?
Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.
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 use a variety of methods, including tried-and-true valuation metrics, to find these stocks.
Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.
One stock to keep an eye on is American Outdoor Brands (AOBC). AOBC 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 10.84, which compares to its industry's average of 14.75. Over the past year, AOBC's Forward P/E has been as high as 25.25 and as low as 9.89, with a median of 15.17.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. AOBC has a P/S ratio of 0.8. This compares to its industry's average P/S of 1.23.
Finally, investors will want to recognize that AOBC has a P/CF ratio of 6.06. 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. AOBC's current P/CF looks attractive when compared to its industry's average P/CF of 15.83. Over the past 52 weeks, AOBC's P/CF has been as high as 10.67 and as low as 5.49, with a median of 7.90.
These are just a handful of the figures considered in American Outdoor Brands's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that AOBC is an impressive value stock right now.
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