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Zacks.com featured highlights include Signet Jewelers Limited, Bassett Furniture Industries, Incorporated, ArcBest Corporation, and Ford Motor Company
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For Immediate Release
Chicago, IL – August 2, 2022 – Stocks in this week’s article are Signet Jewelers Limited (SIG - Free Report) , Bassett Furniture Industries, Incorporated (BSET - Free Report) , ArcBest Corporation (ARCB - Free Report) , and Ford Motor Company (F - Free Report) .
4 Low Price-to-Cash-Flow Stocks to Buy for Optimum Returns
Investment in stocks made on diligent value analysis is usually considered one of the best practices. In value investing, investors pick stocks that are cheap but fundamentally sound. There are a number of ratios to identify value stocks but none alone can conclusively determine their inherent potential.
Each ratio helps an investor understand a particular aspect of the company’s business. One such ratio, Price to Cash Flow (or P/CF), can work wonders in stock picking if used prudently. This metric evaluates the market price of a stock relative to the amount of cash flow that the company is generating on a per-share basis – the lower the number, the better. Signet Jewelers Limited, Bassett Furniture Industries, Incorporated, ArcBest Corporation, and Ford Motor Company boast a low P/CF ratio.
Why P/CF Ratio?
You must be wondering why we are considering this when the most widely used valuation metric is Price/Earnings (or P/E). Well, one of the important factors that make P/CF a highly dependable metric is that operating cash flow adds back non-cash charges such as depreciation and amortization to net income, truly diagnosing a company’s financial health.
Analysts caution that a company’s earnings are subject to accounting estimates and management manipulation. Then again, cash flow is quite reliable. Net cash flow unveils how much money a company generates and how effectively management is deploying the same.
A positive cash flow indicates an increase in the company’s liquid assets. This gives the company the means to settle debt, meet its expenses, reinvest in the business, endure downturns and finally undertake shareholder-friendly moves. Negative cash flow implies a decline in the company’s liquidity, which, in turn, lowers its flexibility to support these endeavors.
However, an investment decision solely based on the P/CF metric may not fetch the desired results. To identify stocks that are trading at a discount, you should expand your search criteria and take into account the price-to-book ratio, price-to-earnings ratio and price-to-sales ratio. Adding a favorable Zacks Rank and a Value Score of A or B to your search criteria should lead to even better results as these eliminate the chances of falling into a value trap.
Here are four of the 13 stocks that qualified the screening:
Signet, the world's largest retailer of diamond jewelry, sports a Zacks Rank #1. It has an expected EPS growth rate of 8% for three-five years. The company has a trailing four-quarter earnings surprise of 65.5%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Signet's current financial year sales and EPS suggests growth of 5.1% and 1.6%, respectively, from the year-ago period. SIG has a Value Score of A. The stock has declined 6.8% in the past year.
Bassett Furniture Industries, which is engaged in the manufacture, marketing, and retail of home furnishings, flaunts a Zacks Rank #1. It has an expected EPS growth rate of 16% for three-five years. The company has a trailing four-quarter earnings surprise of 29.5%, on average.
The Zacks Consensus Estimate for Bassett Furniture's current financial-year sales suggests growth of 29.5% from the year-ago period. BSET has a Value Score of B. The stock has risen 1.8% in the past year.
ArcBest Corporation, which provides freight transportation and integrated logistics services, carries a Zacks Rank #2. It has an expected EPS growth rate of 23.8% for three-five years. The company has a trailing four-quarter earnings surprise of 22.3%, on average.
The Zacks Consensus Estimate for ArcBest Corporation's current financial-year sales and EPS suggests growth of 34% and 59.4%, respectively, from the year-ago period. ARCB has a Value Score of A. The stock has jumped 47% in the past year.
Ford Motor, which designs, manufactures, markets, and services a range of trucks, cars, sport utility vehicles, electrified vehicles, and Lincoln luxury vehicles globally, has a Zacks Rank #2 and an expected EPS growth rate of 9.1% for three-five years. The company has a trailing four-quarter earnings surprise of 24.6%, on average.
The Zacks Consensus Estimate for Ford Motor’s current financial year sales and EPS suggests growth of 12.3% and 22%, respectively, from the year-ago period. Ford Motor has a Value Score of A. The stock has increased 5.6% in the past year.
You can get the rest of the stocks on this list by signing up now for your 2-week free trial to the Research Wizard and start using this screen in your own trading. Further, you can also create your own strategies and backtest them first before taking the investment plunge.
The Research Wizard is a great place to begin. It's easy to use. Everything is in plain language. And it's very intuitive. Start your Research Wizard trial today. And the next time you read an economic report, open up the Research Wizard, plug your finds in, and see what gems come out.
Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.
About Screen of the Week
Zacks.com created the first and best screening system on the web earning the distinction as the "#1 site for screening stocks" by Money Magazine. But powerful screening tools is just the start. That is why Zacks created the Screen of the Week to highlight profitable stock picking strategies that investors can actively use.
Strong Stocks that Should Be in the News
Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has more than doubled the market from 1988 through 2016. Its average gain has been a stellar +25% per year. See these high-potential stocks free >>.
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.
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Zacks.com featured highlights include Signet Jewelers Limited, Bassett Furniture Industries, Incorporated, ArcBest Corporation, and Ford Motor Company
For Immediate Release
Chicago, IL – August 2, 2022 – Stocks in this week’s article are Signet Jewelers Limited (SIG - Free Report) , Bassett Furniture Industries, Incorporated (BSET - Free Report) , ArcBest Corporation (ARCB - Free Report) , and Ford Motor Company (F - Free Report) .
4 Low Price-to-Cash-Flow Stocks to Buy for Optimum Returns
Investment in stocks made on diligent value analysis is usually considered one of the best practices. In value investing, investors pick stocks that are cheap but fundamentally sound. There are a number of ratios to identify value stocks but none alone can conclusively determine their inherent potential.
Each ratio helps an investor understand a particular aspect of the company’s business. One such ratio, Price to Cash Flow (or P/CF), can work wonders in stock picking if used prudently. This metric evaluates the market price of a stock relative to the amount of cash flow that the company is generating on a per-share basis – the lower the number, the better. Signet Jewelers Limited, Bassett Furniture Industries, Incorporated, ArcBest Corporation, and Ford Motor Company boast a low P/CF ratio.
Why P/CF Ratio?
You must be wondering why we are considering this when the most widely used valuation metric is Price/Earnings (or P/E). Well, one of the important factors that make P/CF a highly dependable metric is that operating cash flow adds back non-cash charges such as depreciation and amortization to net income, truly diagnosing a company’s financial health.
Analysts caution that a company’s earnings are subject to accounting estimates and management manipulation. Then again, cash flow is quite reliable. Net cash flow unveils how much money a company generates and how effectively management is deploying the same.
A positive cash flow indicates an increase in the company’s liquid assets. This gives the company the means to settle debt, meet its expenses, reinvest in the business, endure downturns and finally undertake shareholder-friendly moves. Negative cash flow implies a decline in the company’s liquidity, which, in turn, lowers its flexibility to support these endeavors.
However, an investment decision solely based on the P/CF metric may not fetch the desired results. To identify stocks that are trading at a discount, you should expand your search criteria and take into account the price-to-book ratio, price-to-earnings ratio and price-to-sales ratio. Adding a favorable Zacks Rank and a Value Score of A or B to your search criteria should lead to even better results as these eliminate the chances of falling into a value trap.
Here are four of the 13 stocks that qualified the screening:
Signet, the world's largest retailer of diamond jewelry, sports a Zacks Rank #1. It has an expected EPS growth rate of 8% for three-five years. The company has a trailing four-quarter earnings surprise of 65.5%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Signet's current financial year sales and EPS suggests growth of 5.1% and 1.6%, respectively, from the year-ago period. SIG has a Value Score of A. The stock has declined 6.8% in the past year.
Bassett Furniture Industries, which is engaged in the manufacture, marketing, and retail of home furnishings, flaunts a Zacks Rank #1. It has an expected EPS growth rate of 16% for three-five years. The company has a trailing four-quarter earnings surprise of 29.5%, on average.
The Zacks Consensus Estimate for Bassett Furniture's current financial-year sales suggests growth of 29.5% from the year-ago period. BSET has a Value Score of B. The stock has risen 1.8% in the past year.
ArcBest Corporation, which provides freight transportation and integrated logistics services, carries a Zacks Rank #2. It has an expected EPS growth rate of 23.8% for three-five years. The company has a trailing four-quarter earnings surprise of 22.3%, on average.
The Zacks Consensus Estimate for ArcBest Corporation's current financial-year sales and EPS suggests growth of 34% and 59.4%, respectively, from the year-ago period. ARCB has a Value Score of A. The stock has jumped 47% in the past year.
Ford Motor, which designs, manufactures, markets, and services a range of trucks, cars, sport utility vehicles, electrified vehicles, and Lincoln luxury vehicles globally, has a Zacks Rank #2 and an expected EPS growth rate of 9.1% for three-five years. The company has a trailing four-quarter earnings surprise of 24.6%, on average.
The Zacks Consensus Estimate for Ford Motor’s current financial year sales and EPS suggests growth of 12.3% and 22%, respectively, from the year-ago period. Ford Motor has a Value Score of A. The stock has increased 5.6% in the past year.
You can get the rest of the stocks on this list by signing up now for your 2-week free trial to the Research Wizard and start using this screen in your own trading. Further, you can also create your own strategies and backtest them first before taking the investment plunge.
The Research Wizard is a great place to begin. It's easy to use. Everything is in plain language. And it's very intuitive. Start your Research Wizard trial today. And the next time you read an economic report, open up the Research Wizard, plug your finds in, and see what gems come out.
Click here to sign up for a free trial to the Research Wizard today
For the rest of this Screen of the Week article please visit Zacks.com at: https://www.zacks.com/stock/news/1961195/4-low-price-to-cash-flow-stocks-to-buy-for-optimum-returns
Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.
About Screen of the Week
Zacks.com created the first and best screening system on the web earning the distinction as the "#1 site for screening stocks" by Money Magazine. But powerful screening tools is just the start. That is why Zacks created the Screen of the Week to highlight profitable stock picking strategies that investors can actively use.
Strong Stocks that Should Be in the News
Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has more than doubled the market from 1988 through 2016. Its average gain has been a stellar +25% per year. See these high-potential stocks free >>.
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Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Contact: Jim Giaquinto
Company: Zacks.com
Phone: 312-265-9268
Email: pr@zacks.com
Visit: https://www.zacks.com/
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.