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Are Investors Undervaluing Ingredion (INGR) Right Now?
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.
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.
Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.
Ingredion (INGR - Free Report) is a stock many investors are watching right now. INGR is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock is trading with a P/E ratio of 11.24, which compares to its industry's average of 16.67. INGR's Forward P/E has been as high as 13.87 and as low as 10.60, with a median of 12.20, all within the past year.
Another valuation metric that we should highlight is INGR's P/B ratio of 1.97. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. This company's current P/B looks solid when compared to its industry's average P/B of 2.13. Within the past 52 weeks, INGR's P/B has been as high as 2.16 and as low as 1.65, with a median of 1.87.
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. INGR has a P/S ratio of 0.81. This compares to its industry's average P/S of 0.85.
Finally, investors will want to recognize that INGR has a P/CF ratio of 8.97. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 17.64. INGR's P/CF has been as high as 17.78 and as low as 7.78, with a median of 8.94, all within the past year.
Value investors will likely look at more than just these metrics, but the above data helps show that Ingredion is likely undervalued currently. And when considering the strength of its earnings outlook, INGR sticks out at as one of the market's strongest value stocks.