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Zacks

Is Central Garden (CENTA) Stock Undervalued Right Now?

While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.

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

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.

One company value investors might notice is Central Garden (CENTA). CENTA is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A.

Investors should also recognize that CENTA has a P/B ratio of 2.13. The P/B is a method of comparing a stock's market value to 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. CENTA's P/B has been as high as 2.26 and as low as 1.28, with a median of 1.82, over the past year.

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. CENTA has a P/S ratio of 0.82. This compares to its industry's average P/S of 0.94.

Finally, investors will want to recognize that CENTA has a P/CF ratio of 12.22. 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. This company's current P/CF looks solid when compared to its industry's average P/CF of 16.85. Over the past year, CENTA's P/CF has been as high as 13.35 and as low as 8.82, with a median of 11.38.

Value investors will likely look at more than just these metrics, but the above data helps show that Central Garden is likely undervalued currently. And when considering the strength of its earnings outlook, CENTA sticks out at as one of the market's strongest value stocks.


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