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Are Investors Undervaluing Dow Inc. (DOW) Right Now?

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.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

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 Dow Inc. (DOW). DOW is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock holds a P/E ratio of 18.06, while its industry has an average P/E of 20.99. Over the past year, DOW's Forward P/E has been as high as 29.56 and as low as 6.78, with a median of 21.30.

Finally, investors will want to recognize that DOW has a P/CF ratio of 11.65. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. DOW's current P/CF looks attractive when compared to its industry's average P/CF of 11.73. Over the past year, DOW's P/CF has been as high as 81.12 and as low as 9.43, with a median of 32.40.

These are just a handful of the figures considered in Dow Inc.'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 DOW is an impressive value stock right now.


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