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Is ARC Document Solutions (ARC) a Great Value Stock Right Now?

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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.

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 rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

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 stock to keep an eye on is ARC Document Solutions (ARC - Free Report) . ARC is currently sporting a Zacks Rank of #2 (Buy) and an A for Value.

Another notable valuation metric for ARC is its P/B ratio of 0.84. 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 attractive against its industry's average P/B of 0.97. ARC's P/B has been as high as 1.06 and as low as 0.60, with a median of 0.82, 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. ARC has a P/S ratio of 0.46. This compares to its industry's average P/S of 1.25.

Finally, our model also underscores that ARC has a P/CF ratio of 4.16. 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 8.89. Over the past year, ARC's P/CF has been as high as 5.21 and as low as 2.82, with a median of 3.88.

These figures are just a handful of the metrics value investors tend to look at, but they help show that ARC Document Solutions is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, ARC feels like a great value stock at the moment.


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