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Zacks

Should Value Investors Buy Central Garden (CENTA) Stock?

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 a variety of methods, including tried-and-true valuation metrics, to find these stocks.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

One stock to keep an eye on is Central Garden (CENTA). CENTA is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value.

Another notable valuation metric for CENTA is its P/B ratio of 1.99. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. This stock's P/B looks solid versus its industry's average P/B of 4.43. Over the past 12 months, CENTA's P/B has been as high as 2.05 and as low as 1.28, with a median of 1.79.

Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. CENTA has a P/S ratio of 0.8. This compares to its industry's average P/S of 0.86.

Finally, investors should note that CENTA has a P/CF ratio of 11.97. 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. CENTA's current P/CF looks attractive when compared to its industry's average P/CF of 16.85. Within the past 12 months, CENTA's P/CF has been as high as 13.35 and as low as 8.82, with a median of 11.40.

These are only a few of the key metrics included in Central Garden's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, CENTA looks like an impressive value stock at the moment.


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