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 Ingredion Incorporated (INGR Quick QuoteINGR - 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, Ingredion Incorporated has a trailing twelve months PE ratio of 17.2, 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 20.5. If we focus on the long-term PE trend, Ingredion Incorporated’s current PE level puts it above its midpoint of 14.72 over the past five years, with the number having risen rapidly over the past few months. Further, the current level stands below the highs for the stock scaled in the last five years, suggesting that it could be a good entry point.  



Also, the stock’s PE also compares favorably with the Zacks classified Consumer Staples sector’s trailing twelve months PE ratio, which stands at 24.58. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
 


We should also point out that Ingredion Incorporated has a forward PE ratio (price relative to this year’s earnings) of just 15.89, so it is fair to say that a slightly more value-oriented path may be ahead for Ingredion Incorporated stock in the near term too.

P/S Ratio

Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.

Right now, Ingredion Incorporated has a P/S ratio of about 1.60, which is way lower than the S&P 500 average that comes in at 3.11 right now. This indicates that the stock is undervalued from this aspect too, well-reflected in the chart below.



Broad Value Outlook

In aggregate, Ingredion Incorporated 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 Ingredion Incorporated a solid choice for value investors, and some of its other key metrics make this pretty clear too.

For example, the PEG ratio for Ingredion Incorporated is just 1.44, a level that is far lower than the industry average of 2.47. The PEG ratio is a modified PE ratio that takes into account the stock’s earnings growth rate. Additionally, its P/CF ratio (another great indicator of value) comes in at 9.94, which is better than the industry average of 12.22. Clearly, INGR is a solid choice on the value front from multiple angles.

What About the Stock Overall?

Though Ingredion Incorporated 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 INGR a Zacks VGM score—or its overarching fundamental grade—of ‘B’. (You can read more about the Zacks Style Scores here >>)

Meanwhile, the company’s recent earnings estimates have been mixed at best. The current quarter has seen no upward revisions in the past sixty days compared to one lower, while the full year estimate has seen one upward and no downward revisions in the same time period.

This has had just a mixed impact on the consensus estimate, as the current quarter consensus estimate has slipped by 1.6% in the past two months, while the full year estimate has inched higher by 0.1%. You can see the consensus estimate trend and recent price action for the stock in the chart below:

This somewhat mixed 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. While analysts expect some near-term hurdles, the company’s long-term prospects look favorable, which is also evident from its long-term growth rate of 11%.

Bottom Line

Clearly, Ingredion Incorporated is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. However, with a sluggish industry rank (Bottom 37% out of over 250 industries) and a Zacks Rank #3, it is hard to get too excited about this company overall. Further, over the past one year, the Zacks Food – Miscellaneous/Diversified industry has underperformed the broader market, as you can see below.



So, value investors might want to wait for estimates and analyst sentiment to turn around in this name first, but once that happens, this stock could be a compelling pick.

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