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Are Investors Undervaluing Owens Corning (OC) Right Now?

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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.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

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.

One company to watch right now is Owens Corning (OC - Free Report) . OC is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock holds a P/E ratio of 9.82, while its industry has an average P/E of 13.36. Over the last 12 months, OC's Forward P/E has been as high as 12.28 and as low as 6.49, with a median of 9.88.

Investors should also recognize that OC has a P/B ratio of 2.43. The P/B ratio pits a stock's market value against 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 3.90. Over the past 12 months, OC's P/B has been as high as 2.62 and as low as 1.58, with a median of 1.97.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's 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. OC has a P/S ratio of 1.29. This compares to its industry's average P/S of 1.38.

Finally, investors will want to recognize that OC has a P/CF ratio of 6.32. 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 16.76. Within the past 12 months, OC's P/CF has been as high as 6.82 and as low as 4.07, with a median of 4.93.

Value investors will likely look at more than just these metrics, but the above data helps show that Owens Corning is likely undervalued currently. And when considering the strength of its earnings outlook, OC sticks out at as one of the market's strongest value stocks.


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