Yahoo Finance Is NOW (DNOW) a Great Value Stock Right Now?
Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.
Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
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 NOW (DNOW). DNOW is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock has a Forward P/E ratio of 9.11. This compares to its industry's average Forward P/E of 22.25. DNOW's Forward P/E has been as high as 20.75 and as low as 8.39, with a median of 13.55, all within the past year.
Investors should also recognize that DNOW has a P/B ratio of 1.24. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. DNOW's current P/B looks attractive when compared to its industry's average P/B of 1.88. Within the past 52 weeks, DNOW's P/B has been as high as 1.92 and as low as 1.14, with a median of 1.59.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. DNOW has a P/S ratio of 0.44. This compares to its industry's average P/S of 1.16.
These figures are just a handful of the metrics value investors tend to look at, but they help show that NOW is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, DNOW feels like a great value stock at the moment.
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NOW Inc. (DNOW) : Free Stock Analysis Report
