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Are Investors Undervaluing These Consumer Discretionary Stocks Right Now?

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While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.

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.

Central Garden & Pet (CENT - Free Report) is a stock many investors are watching right now. CENT is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock has a Forward P/E ratio of 16.20. This compares to its industry's average Forward P/E of 18.34. Over the last 12 months, CENT's Forward P/E has been as high as 24.80 and as low as 14.67, with a median of 18.51.

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. CENT has a P/S ratio of 0.85. This compares to its industry's average P/S of 0.99.

Investors could also keep in mind Central Garden & Pet (CENTA - Free Report) , an Consumer Products - Discretionary stock with a Zacks Rank of # 2 (Buy) and Value grade of A.

Additionally, Central Garden & Pet has a P/B ratio of 2.12 while its industry's price-to-book ratio sits at 17.46. For CENTA, this valuation metric has been as high as 2.67, as low as 1.75, with a median of 2.09 over the past year.

These are only a few of the key metrics included in Central Garden & Pet and Central Garden & Pet strong Value grade, but they help show that the stocks are likely undervalued right now. When factoring in the strength of its earnings outlook, CENT and CENTA look like an impressive value stock at the moment.


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