Is Orion Engineered Carbons (OEC) Stock Undervalued 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, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
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 Orion Engineered Carbons (OEC). OEC is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock has a Forward P/E ratio of 12.71. This compares to its industry's average Forward P/E of 17.01. OEC's Forward P/E has been as high as 15.94 and as low as 4.20, with a median of 10.64, all within the past year.
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. OEC has a P/S ratio of 0.73. This compares to its industry's average P/S of 0.95.
Finally, investors should note that OEC has a P/CF ratio of 6.61. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 11.73. Over the past year, OEC's P/CF has been as high as 6.78 and as low as 2.11, with a median of 5.36.
These are just a handful of the figures considered in Orion Engineered Carbons'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 OEC is an impressive value stock right now.
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