Should Value Investors Buy TreeHouse Foods (THS) Stock?

THS

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.

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 to watch right now is TreeHouse Foods (THS - Free Report) . THS is currently sporting a Zacks Rank of #2 (Buy) and an A for Value.

Another valuation metric that we should highlight is THS's P/B ratio of 1.58. 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 company's current P/B looks solid when compared to its industry's average P/B of 2.35. Over the past year, THS's P/B has been as high as 1.65 and as low as 0.93, with a median of 1.23.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. THS has a P/S ratio of 0.62. This compares to its industry's average P/S of 1.1.

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

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