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Are Investors Undervaluing SMART Global Holdings, Inc. (SGH) Right Now?

Zacks

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.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of 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.

SMART Global Holdings, Inc. (SGH) is a stock many investors are watching right now. SGH is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock has a Forward P/E ratio of 4.37. This compares to its industry’s average Forward P/E of 8.20. SGH’s Forward P/E has been as high as 11.67 and as low as 3.87, with a median of 6.65, all within the past year.


SGH is also sporting a PEG ratio of 0.32. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock’s expected earnings growth rate. SGH’s PEG compares to its industry’s average PEG of 0.83. Within the past year, SGH’s PEG has been as high as 0.78 and as low as 0.30, with a median of 0.46.

Another notable valuation metric for SGH is its P/B ratio of 4.12. The P/B ratio pits a stock’s market value against its book value, which is defined as total assets minus total liabilities. SGH’s current P/B looks attractive when compared to its industry’s average P/B of 4.90. SGH’s P/B has been as high as 10.22 and as low as 3.64, with a median of 6.61, over the past year.

Finally, investors should note that SGH has a P/CF ratio of 4.77. This data point considers a firm’s operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. This stock’s P/CF looks attractive against its industry’s average P/CF of 14.50. Over the past 52 weeks, SGH’s P/CF has been as high as 25.87 and as low as 4.22, with a median of 11.55.

Value investors will likely look at more than just these metrics, but the above data helps show that SMART Global Holdings, Inc. Is likely undervalued currently. And when considering the strength of its earnings outlook, SGH sticks out at as one of the market’s strongest value stocks.


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