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Are Investors Undervaluing Sanderson Farms (SAFM) 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.

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 a variety of methods, including tried-and-true valuation metrics, to find these stocks.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

Sanderson Farms is a stock many investors are watching right now. SAFM is currently sporting a Zacks Rank of #1 (Strong Buy) and an A for Value. The stock is trading with P/E ratio of 6.96 right now. For comparison, its industry sports an average P/E of 12.51. Over the past 52 weeks, SAFM's Forward P/E has been as high as 16.35 and as low as 6.33, with a median of 10.40.

We should also highlight that SAFM has a P/B ratio of 2.19. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. This company's current P/B looks solid when compared to its industry's average P/B of 2.33. Within the past 52 weeks, SAFM's P/B has been as high as 2.87 and as low as 1.95, with a median of 2.28.

Finally, we should also recognize that SAFM has a P/CF ratio of 5.29. 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. SAFM's P/CF compares to its industry's average P/CF of 9.99. Within the past 12 months, SAFM's P/CF has been as high as 12.73 and as low as 4.71, with a median of 6.59.

These are only a few of the key metrics included in Sanderson Farms's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, SAFM looks like an impressive value stock at the moment.

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