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Are Investors Undervaluing Owens Corning (OC) Right Now?

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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.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

Owens Corning (OC - Free Report) is a stock many investors are watching right now. OC is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock holds a P/E ratio of 12.30, while its industry has an average P/E of 17. Over the last 12 months, OC's Forward P/E has been as high as 19.95 and as low as 11.72, with a median of 14.43.

Investors should also note that OC holds a PEG ratio of 0.88. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. OC's PEG compares to its industry's average PEG of 1.47. Over the last 12 months, OC's PEG has been as high as 4.73 and as low as 0.83, with a median of 1.34.

We should also highlight that OC has a P/B ratio of 2.63. Investors use the P/B ratio to look at a stock's market value versus 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 3.81. Over the past 12 months, OC's P/B has been as high as 2.85 and as low as 1.17, with a median of 2.04.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. OC has a P/S ratio of 1.47. This compares to its industry's average P/S of 2.09.

Finally, investors will want to recognize that OC has a P/CF ratio of 8.53. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. OC's current P/CF looks attractive when compared to its industry's average P/CF of 16.41. Over the past year, OC's P/CF has been as high as 9.36 and as low as 4.69, with a median of 8.29.

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


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