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Are Investors Undervaluing Aerojet Rocketdyne Holdings (AJRD) 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.

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.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.

Aerojet Rocketdyne Holdings (AJRD) is a stock many investors are watching right now. AJRD is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock has a Forward P/E ratio of 19.97. This compares to its industry's average Forward P/E of 21.64. Over the last 12 months, AJRD's Forward P/E has been as high as 26.11 and as low as 17.46, with a median of 21.64.

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. AJRD has a P/S ratio of 1.46. This compares to its industry's average P/S of 2.2.

Finally, our model also underscores that AJRD has a P/CF ratio of 15.63. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. AJRD's current P/CF looks attractive when compared to its industry's average P/CF of 16.49. Over the past year, AJRD's P/CF has been as high as 20.39 and as low as 14.29, with a median of 17.35.

These figures are just a handful of the metrics value investors tend to look at, but they help show that Aerojet Rocketdyne Holdings is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, AJRD feels like a great value stock at the moment.


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