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Should Value Investors Buy Owens Corning (OC) Stock?

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Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

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 use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

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 Owens Corning (OC - Free Report) . OC is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock is trading with P/E ratio of 14.34 right now. For comparison, its industry sports an average P/E of 19.90. OC's Forward P/E has been as high as 19.95 and as low as 7.92, with a median of 14.43, all within the past year.

Investors should also note that OC holds a PEG ratio of 1.02. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. OC's PEG compares to its industry's average PEG of 1.73. OC's PEG has been as high as 4.73 and as low as 0.83, with a median of 1.39, all within the past year.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. OC has a P/S ratio of 1.45. This compares to its industry's average P/S of 2.09.

Finally, our model also underscores that OC has a P/CF ratio of 9.63. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 16.63. Over the past year, OC's P/CF has been as high as 9.69 and as low as 4.50, with a median of 8.37.

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


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