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Are Investors Undervaluing Archer Daniels Midland (ADM) Right Now?

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Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

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.

One stock to keep an eye on is Archer Daniels Midland (ADM - Free Report) . ADM is currently sporting a Zacks Rank of #1 (Strong Buy) and an A for Value. The stock is trading with P/E ratio of 11.88 right now. For comparison, its industry sports an average P/E of 13.75. Over the last 12 months, ADM's Forward P/E has been as high as 18.93 and as low as 11.29, with a median of 14.05.

Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. ADM has a P/S ratio of 0.41. This compares to its industry's average P/S of 0.91.

Finally, investors will want to recognize that ADM has a P/CF ratio of 8.15. 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. ADM's current P/CF looks attractive when compared to its industry's average P/CF of 8.49. Over the past 52 weeks, ADM's P/CF has been as high as 14.28 and as low as 7.91, with a median of 10.37.

Value investors will likely look at more than just these metrics, but the above data helps show that Archer Daniels Midland is likely undervalued currently. And when considering the strength of its earnings outlook, ADM sticks out at as one of the market's strongest value stocks.

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