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Should Value Investors Buy Ethan Allen Interiors Inc. (ETD) Stock?

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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.

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 tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

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.

Ethan Allen Interiors Inc. (ETD - Free Report) is a stock many investors are watching right now. ETD is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock is trading with P/E ratio of 12.90 right now. For comparison, its industry sports an average P/E of 16.78. ETD's Forward P/E has been as high as 13.49 and as low as 7.77, with a median of 11.08, all within the past year.

Finally, our model also underscores that ETD has a P/CF ratio of 10.25. 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. This stock's P/CF looks attractive against its industry's average P/CF of 14.27. ETD's P/CF has been as high as 10.44 and as low as 6.09, with a median of 8.41, 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 Ethan Allen Interiors Inc. Is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, ETD feels like a great value stock at the moment.


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