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 Colfax Corporation 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, Colfax has a trailing twelve months PE ratio of 13.19, as you can see in the chart below:
This level actually compares favorably with the market at large, as the PE for the S&P 500 stands at about 18.16. If we focus on the long- term PE trend, Colfax’ current PE level puts it below its midpoint of 20.88 over the past five years. Moreover, the current level stands well below the highs for the stock, suggesting that it can be a solid entry point.
Further, the stock’s PE also compares favorably with the Zacks Industrial Products sector’s trailing twelve months PE ratio, which stands at 17.62. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that Colfax has a forward PE ratio (price relative to this year’s earnings) of 11.93, so it is fair to say that a slightly more value-oriented path may be ahead for Colfax stock in the near term too.
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, Colfax has a P/S ratio of 0.98. This is much lower than the S&P 500 average, which comes in at 3.31 right now. Also, as we can see in the chart below, this is considerably below the highs for this stock in particular over the past few years.
Broad Value Outlook
In aggregate, Colfax currently has a Value Score of B, putting it into the top 40% of all stocks we cover from this look. This makes Colfax a solid choice for value investors, and some of its other key metrics make this pretty clear too.
For example, the PEG ratio for Colfax is just 0.96, a level that is lower than the industry average of 1.72. The PEG ratio is a modified PE ratio that takes into account the stock’s earnings growth rate. Additionally, its P/CF ratio (another great indicator of value) comes in at 8.38, which is much better than the industry average of 13.10. Clearly, CFX is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though Colfax 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 Score of B and Momentum Score of A. This gives CFX a Zacks VGM score — or its overarching fundamental grade — of A. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been mixed at the best. The current quarter has seen one upward revision in the past sixty days compared to three downward, while the full year estimate has seen six upward revisions compared to five downward revisions in the same time period.
As a result, the current quarter consensus estimate has declined 9.26% in the past two months, while the full year estimate increased 1.18%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Colfax Corporation Price and Consensus
Even though Colfax has a stable estimates trend, the stock has just a Zacks Rank #3 (Hold), which is why we are looking for in-line performance from the company in the near term.
Bottom Line
Colfax is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. However, the company carries a sluggish industry rank (among Bottom 27% of more than 250 industries). In fact, over the past two years, the broader industry has underperformed the market at large as you can see below:
.jpg)
So, value investors might want to wait for estimates to turn around in this name first, but once that happens, this stock could be a compelling pick.
Is Your Investment Advisor Fumbling Your Financial Future?
See how you can more effectively safeguard your retirement with a new Special Report, “4 Warning Signs Your Investment Advisor Might Be Sabotaging Your Financial Future.”
Click to get it free >>
Image: Bigstock
Is Colfax (CFX) a Suitable Stock for Value Investors Now?
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 Colfax Corporation 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, Colfax has a trailing twelve months PE ratio of 13.19, as you can see in the chart below:
This level actually compares favorably with the market at large, as the PE for the S&P 500 stands at about 18.16. If we focus on the long- term PE trend, Colfax’ current PE level puts it below its midpoint of 20.88 over the past five years. Moreover, the current level stands well below the highs for the stock, suggesting that it can be a solid entry point.
Further, the stock’s PE also compares favorably with the Zacks Industrial Products sector’s trailing twelve months PE ratio, which stands at 17.62. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that Colfax has a forward PE ratio (price relative to this year’s earnings) of 11.93, so it is fair to say that a slightly more value-oriented path may be ahead for Colfax stock in the near term too.
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, Colfax has a P/S ratio of 0.98. This is much lower than the S&P 500 average, which comes in at 3.31 right now. Also, as we can see in the chart below, this is considerably below the highs for this stock in particular over the past few years.
Broad Value Outlook
In aggregate, Colfax currently has a Value Score of B, putting it into the top 40% of all stocks we cover from this look. This makes Colfax a solid choice for value investors, and some of its other key metrics make this pretty clear too.
For example, the PEG ratio for Colfax is just 0.96, a level that is lower than the industry average of 1.72. The PEG ratio is a modified PE ratio that takes into account the stock’s earnings growth rate. Additionally, its P/CF ratio (another great indicator of value) comes in at 8.38, which is much better than the industry average of 13.10. Clearly, CFX is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though Colfax 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 Score of B and Momentum Score of A. This gives CFX a Zacks VGM score — or its overarching fundamental grade — of A. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been mixed at the best. The current quarter has seen one upward revision in the past sixty days compared to three downward, while the full year estimate has seen six upward revisions compared to five downward revisions in the same time period.
As a result, the current quarter consensus estimate has declined 9.26% in the past two months, while the full year estimate increased 1.18%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Colfax Corporation Price and Consensus
Colfax Corporation Price and Consensus | Colfax Corporation Quote
Even though Colfax has a stable estimates trend, the stock has just a Zacks Rank #3 (Hold), which is why we are looking for in-line performance from the company in the near term.
Bottom Line
Colfax is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. However, the company carries a sluggish industry rank (among Bottom 27% of more than 250 industries). In fact, over the past two years, the broader industry has underperformed the market at large as you can see below:
So, value investors might want to wait for estimates to turn around in this name first, but once that happens, this stock could be a compelling pick.
Is Your Investment Advisor Fumbling Your Financial Future?
See how you can more effectively safeguard your retirement with a new Special Report, “4 Warning Signs Your Investment Advisor Might Be Sabotaging Your Financial Future.”
Click to get it free >>