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Should Value Investors Buy American Outdoor Brands (AOUT) 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 tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

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 American Outdoor Brands (AOUT - Free Report) . AOUT is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock has a Forward P/E ratio of 13.53. This compares to its industry's average Forward P/E of 22.92. Over the last 12 months, AOUT's Forward P/E has been as high as 32.45 and as low as 11.21, with a median of 15.23.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. AOUT has a P/S ratio of 0.51. This compares to its industry's average P/S of 0.83.

Finally, we should also recognize that AOUT has a P/CF ratio of 21.20. 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 stock's P/CF looks attractive against its industry's average P/CF of 33.87. Over the past 52 weeks, AOUT's P/CF has been as high as 26.88 and as low as -2,292.16, with a median of 21.62.

These are only a few of the key metrics included in American Outdoor Brands's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, AOUT looks like an impressive value stock at the moment.


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