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Are Investors Undervaluing Greif (GEF) Right Now?

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.

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 company to watch right now is Greif (GEF). GEF is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A.

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We also note that GEF holds a PEG ratio of 1.65. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. GEF's industry currently sports an average PEG of 2.42. GEF's PEG has been as high as 1.91 and as low as 1.01, with a median of 1.18, all within the past year.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. GEF has a P/S ratio of 0.55. This compares to its industry's average P/S of 0.93.

Finally, investors should note that GEF has a P/CF ratio of 5.98. 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 20.57. GEF's P/CF has been as high as 7.19 and as low as 4.13, with a median of 6.18, all within the past year.

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

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Zacks Investment Research