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Should Value Investors Buy Greenhill & Co. (GHL) Stock?

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The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find 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 fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

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.

Greenhill & Co. is a stock many investors are watching right now. GHL is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock holds a P/E ratio of 8.37, while its industry has an average P/E of 14.68. Over the past year, GHL's Forward P/E has been as high as 12 and as low as 7, with a median of 8.35.

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. GHL has a P/S ratio of 1.14. This compares to its industry's average P/S of 2.11.

Finally, our model also underscores that GHL has a P/CF ratio of 9.69. 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. GHL's current P/CF looks attractive when compared to its industry's average P/CF of 19.03. GHL's P/CF has been as high as 12.35 and as low as 4.28, with a median of 6.18, all within the past year.

These are just a handful of the figures considered in Greenhill & Co.'s great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that GHL is an impressive value stock right now.

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