Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?

One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Pilgrim's Pride Corporation (PPC Quick QuotePPC - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:

PE Ratio

A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.

On this front, Pilgrim's Pride has a trailing twelve months PE ratio of 11.17, as you can see in the chart below:

This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 stands at about 19.72. If we focus on the long-term PE trend, current PE level of Pilgrim's Pride puts it above its midpoint over the past five years.

Further, the stock’s PE also compares favorably with the Zacks classified Food-Meat Products industry’s trailing twelve months PE ratio, which stands at 15.73. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.

We should also point out that Pilgrim's Pride has a forward PE ratio (price relative to this year’s earnings) of just 10.35, so it is fair to say that a slightly more value-oriented path may be ahead for Pilgrim's Pride stock in the near term too.

P/CF Ratio

An often overlooked ratio that can still be a great indicator of value is the price/cash flow metric. This ratio doesn’t take amortization and depreciation into account, so can give a more accurate picture of the financial health in a business. This is a preferred metric to some valuation investors because cash flows are (a) generally less prone to manipulation by the company’s management and (b) are less affected by variation in accounting policies between different companies.

The ratio is generally applied to find out whether a company’s stock is overpriced or underpriced with reference to its cash flows generation potential compared with its competitors. However, it is not commonly used for cross-industry comparison, as the average price to cash flow ratio varies from industry to industry.

In this case, P/CF ratio of Pilgrim's Pride is 7.98 which is considerably lower than the Zacks classified Food-Meat Products industry average of 12.7, which indicates that the stock is undervalued in this respect.

Broad Value Outlook

In aggregate, Pilgrim's Pride currently has a Zacks Value Style Score of ‘A’, putting it into the top 20% of all stocks we cover from this look. This makes Pilgrim's Pride a solid choice for value investors and some of its other key metrics make this pretty clear too.

For example, Pilgrim's Pride has a P/S ratio of about 0.59 which is lower than the Zacks categorized Food-Meat Products industry average, which comes in at 0.65 right now. Clearly, PPC is a solid choice on the value front from multiple angles.

What About the Stock Overall?

Though Pilgrim's Pride might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘B’ and a Momentum score of ‘F’. This gives PPC a Zacks VGM score—or its overarching fundamental grade—of ‘A’. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have trended down. The consensus estimate for the current quarter has dipped by 5.1% in the past two months, while the full year estimate has inched lower by 1.2%. You can see the consensus estimate trend and recent price action for the stock in the chart below:

PILGRIMS PRIDE Price and Consensus

This disappointing trend is why the stock has just a Zacks Rank #3 (Hold) and why we are looking for in-line performance from the company in the near term.

Bottom Line

Pilgrim's Pride is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Despite having a Zacks Rank #3, the stock belongs to an industry which is ranked among the Top 20%, which indicates that broader factors are favourable for the company. Further, the Zacks categorized Food-Meat Products industry has outperformed the broader market in the last two year, as you can see below:

So, it might pay for value investors to delve deeper into the company’s prospects, as fundamentals indicate that this stock could be a compelling pick.

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