Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Milacron Holdings Corp. stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Milacron has a trailing twelve months PE ratio of 12.18, as you can see in the chart below:
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This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 stands at about 19.89. If we focus on the long-term PE trend, Milacron’s current PE level puts it above its midpoint over the past five years, with the number having risen rapidly over the past few months.
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Further, the stock’s PE also compares favorably with the Zacks classified Manufacturing - Material Handling industry’s trailing twelve months PE ratio, which stands at 15.64. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that Milacron has a forward PE ratio (price relative to this year’s earnings) of just 12.08, which is roughly in line with the current level. Hence the forward earnings estimates are already incorporated in the company’s current share price/.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Milacron has a P/S ratio of about 1.10. This is lower than the S&P 500 average, which comes in at 2.97 right now. Also, as we can see in the chart below, this is among the highs for this stock in particular over the past few years.
If anything, MCRN is towards the higher end of its range in the time period from a P/S metric, which suggests that the company’s stock price has already appreciated to some degree, relative to its sales.
Broad Value Outlook
In aggregate, Milacron currently has a Zacks Value Style Score of ‘B’, putting it into the top 40% of all stocks we cover from this look. This makes Milacron a solid choice for value investors.
What About the Stock Overall?
Though Milacron might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘F’ and a Momentum score of ‘F’. This gives MCRN a Zacks VGM score—or its overarching fundamental grade—of ‘F’. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been mixed at best. The current quarter has seen one estimate go higher in the past sixty days compared to one lower, while the full year estimate has seen one upward and no downward movement in the same time period.
Regardless of increase in the number of analyst, current quarter consensus estimate has declined by 8.3% in the past two months, while full year estimate has inched lower by 0.7%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Milacron Holdings Corp. Price and Consensus
Milacron Holdings Corp. Price and Consensus | Milacron Holdings Corp. Quote
In spite of the slightly bearish analyst opinion, the stock’s Zacks Rank #2 (Buy) indicates robust fundamentals and expectations of outperformance in the near term.
Bottom Line
Milacron is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. With a formidable industry rank (among the Top 8%) and strong Zacks Rank, Milacron looks like a strong value contender. Moreover,
over the past one year, the Zacks Manufacturing - Material Handling industry has significantly outperformed the broader market, as you can see below:
So, it might pay for value investors to delve deeper into the company’s prospects, as fundamentals indicate that this stock could be a compelling pick.
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Should Value Investors Choose Milacron (MCRN)?
Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Milacron Holdings Corp. stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Milacron has a trailing twelve months PE ratio of 12.18, as you can see in the chart below:
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 stands at about 19.89. If we focus on the long-term PE trend, Milacron’s current PE level puts it above its midpoint over the past five years, with the number having risen rapidly over the past few months.
Further, the stock’s PE also compares favorably with the Zacks classified Manufacturing - Material Handling industry’s trailing twelve months PE ratio, which stands at 15.64. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that Milacron has a forward PE ratio (price relative to this year’s earnings) of just 12.08, which is roughly in line with the current level. Hence the forward earnings estimates are already incorporated in the company’s current share price/.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Milacron has a P/S ratio of about 1.10. This is lower than the S&P 500 average, which comes in at 2.97 right now. Also, as we can see in the chart below, this is among the highs for this stock in particular over the past few years.
If anything, MCRN is towards the higher end of its range in the time period from a P/S metric, which suggests that the company’s stock price has already appreciated to some degree, relative to its sales.
Broad Value Outlook
In aggregate, Milacron currently has a Zacks Value Style Score of ‘B’, putting it into the top 40% of all stocks we cover from this look. This makes Milacron a solid choice for value investors.
What About the Stock Overall?
Though Milacron might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘F’ and a Momentum score of ‘F’. This gives MCRN a Zacks VGM score—or its overarching fundamental grade—of ‘F’. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been mixed at best. The current quarter has seen one estimate go higher in the past sixty days compared to one lower, while the full year estimate has seen one upward and no downward movement in the same time period.
Regardless of increase in the number of analyst, current quarter consensus estimate has declined by 8.3% in the past two months, while full year estimate has inched lower by 0.7%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Milacron Holdings Corp. Price and Consensus
Milacron Holdings Corp. Price and Consensus | Milacron Holdings Corp. Quote
In spite of the slightly bearish analyst opinion, the stock’s Zacks Rank #2 (Buy) indicates robust fundamentals and expectations of outperformance in the near term.
Bottom Line
Milacron is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. With a formidable industry rank (among the Top 8%) and strong Zacks Rank, Milacron looks like a strong value contender. Moreover,
over the past one year, the Zacks Manufacturing - Material Handling industry has significantly outperformed the broader market, as you can see below:
So, it might pay for value investors to delve deeper into the company’s prospects, as fundamentals indicate that this stock could be a compelling pick.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest tickers for the entirety of 2017?
Who wouldn't? These 10 are painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Be among the very first to see them >>