Yahoo Finance Zacks.com featured highlights KB Home, Gray Television, ODP and General Motors
For Immediate Release
Chicago, IL – May 16, 2024 – Stocks in this week’s article are KB Home KBH, Gray Television, Inc. GTN, The ODP Corp. ODP and General Motors Company GM.
4 Stocks with Low Price-to-Cash-Flow Ratios to Buy Now
Against the backdrop of elevated interest rates, underlying inflationary pressure and geopolitical uncertainties in the Middle East, the quest for stability becomes even more challenging. This pivotal juncture underscores the importance of a diversified investment approach.
We believe investment in stocks made on diligent value analysis is one of the best practices. In value investing, investors pick stocks that are cheap but fundamentally sound. There are a number of ratios to identify value stocks but none alone can conclusively determine their inherent potential. Each ratio helps an investor understand a particular aspect of the company’s business.
One such ratio, Price to Cash Flow (or P/CF), can work wonders in stock picking if used prudently. This metric evaluates the market price of a stock relative to the amount of cash flow that the company is generating on a per share basis — the lower the number, the better. KB Home, Gray Television, Inc., The ODP Corp. and General Motors Company boast a low P/CF ratio.
Why P/CF Ratio?
You must be wondering why we are considering this when the most widely used valuation metric is Price/Earnings (or P/E). Well, an important factor that makes P/CF a highly dependable metric is that operating cash flow adds back non-cash charges such as depreciation and amortization to net income, truly diagnosing a company’s financial health.
Analysts caution that a company’s earnings are subject to accounting estimates and management manipulation. Then again, cash flow is quite reliable. Net cash flow unveils how much money a company generates and how effectively management is deploying the same.
A positive cash flow indicates an increase in the company’s liquid assets. This gives the company the means to settle debt, meet its expenses, reinvest in the business, endure downturns and finally undertake shareholder-friendly moves. Negative cash flow implies a decline in the company’s liquidity, which, in turn, lowers its flexibility to support these endeavors.
However, an investment decision solely based on the P/CF metric may not fetch the desired results. To identify stocks that are trading at a discount, you should expand your search criteria and take into account the price-to-book ratio, price-to-earnings ratio and price-to-sales ratio. Adding a favorable Zacks Rank and a Value Score of A or B to your search criteria should lead to even better results as these eliminate the chances of falling into a value trap.
Here are four of the seven stocks that qualified the screening:
KB Home, one of the largest and most recognized homebuilders in the United States, sports a Zacks Rank #1. The company delivered a trailing four-quarter earnings surprise of 26.1%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for KB Home's current financial year sales and EPS suggests growth of 5.6% and 13.9%, respectively, from the year-ago period. KBH has a Value Score of A. Shares of KBH have gained 54.7% in the past year.
Gray Television, a television broadcasting company, owns and operates television stations and digital assets in the United States. It sports a Zacks Rank #1 presently. The company delivered a positive earnings surprise in the last reported quarter.
The Zacks Consensus Estimate for Gray Television’s current financial year sales and EPS suggests growth of 18.4% and 477.7%, respectively, from the year-ago period. Gray Television has a Value Score of A. Shares of GTN have declined 6.4% in the past year.
The ODP Corporation, which provides business services and supplies, products and digital workplace technology solutions for small, medium, and enterprise businesses, sports a Zacks Rank #1 currently. The company has a trailing four-quarter earnings surprise of 8.6%, on average.
The Zacks Consensus Estimate for The ODP Corporation’s current financial year sales suggests growth of 7.7% from the year-ago period. The ODP Corporation has a Value Score of A. Shares of ODP have risen 1.8% in the past year.
General Motors, which designs, builds, and sells cars, trucks, crossovers, and automobile parts globally, carries a Zacks Rank #2 presently. The company has a trailing four-quarter earnings surprise of 17.8%, on average.
The Zacks Consensus Estimate for General Motors’ current financial year sales and EPS suggests growth of 1.7% and 22.4%, respectively, from the year-ago period. General Motors has a Value Score of A. Shares of GM have rallied 42.8% in the past year.
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For the rest of this Screen of the Week article please visit Zacks.com at: https://www.zacks.com/stock/news/2274208/4-stocks-with-low-price-to-cash-flow-ratio-to-buy-now
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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The ODP Corporation (ODP) : Free Stock Analysis Report
General Motors Company (GM) : Free Stock Analysis Report
KB Home (KBH) : Free Stock Analysis Report
Gray Television, Inc. (GTN) : Free Stock Analysis Report
