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Is Western Digital (WDC) a Great Value Stock Right Now?

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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, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

One company to watch right now is Western Digital (WDC - Free Report) . WDC is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock is trading with P/E ratio of 7.45 right now. For comparison, its industry sports an average P/E of 15.35. Over the past 52 weeks, WDC's Forward P/E has been as high as 18.45 and as low as 6.97, with a median of 10.77.

We should also highlight that WDC has a P/B ratio of 2.14. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. This stock's P/B looks attractive against its industry's average P/B of 3.39. Within the past 52 weeks, WDC's P/B has been as high as 2.38 and as low as 1.06, with a median of 1.62.

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. WDC has a P/S ratio of 1.28. This compares to its industry's average P/S of 2.79.

Finally, our model also underscores that WDC has a P/CF ratio of 12.58. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 17.03. Within the past 12 months, WDC's P/CF has been as high as 14 and as low as 7.08, with a median of 9.87.

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


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