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Are Investors Undervaluing Clearwater Paper (CLW) Right Now?
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.
Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. 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.
One stock to keep an eye on is Clearwater Paper (CLW - Free Report) . CLW is currently sporting a Zacks Rank of #1 (Strong Buy), as well as an A grade for Value.
Another notable valuation metric for CLW is its P/B ratio of 1.15. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. This stock's P/B looks solid versus its industry's average P/B of 2.87. CLW's P/B has been as high as 1.47 and as low as 0.82, with a median of 1.11, over the past year.
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. CLW has a P/S ratio of 0.32. This compares to its industry's average P/S of 0.48.
Finally, we should also recognize that CLW has a P/CF ratio of 3.95. 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. This stock's P/CF looks attractive against its industry's average P/CF of 9.53. Within the past 12 months, CLW's P/CF has been as high as 8.20 and as low as 3.74, with a median of 6.15.
Value investors will likely look at more than just these metrics, but the above data helps show that Clearwater Paper is likely undervalued currently. And when considering the strength of its earnings outlook, CLW sticks out at as one of the market's strongest value stocks.