For Immediate Release
Chicago, IL – June 12, 2023 – Stocks in this week’s article are Unum Group UNM, General Motors Company GM, American International Group, Inc. AIG and G-III Apparel Group, Ltd. GIII.
4 Stocks With Low Price-to-Cash Flow Ratio to Buy Now
Investment in stocks made on diligent value analysis is usually considered 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. Unum Group, General Motors Company, American International Group, Inc. and G-III Apparel Group, Ltd. boasts 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 endeavours.
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 this eliminates the chances of falling into a value trap.
Here are four of the 11 stocks that qualified the screening:
Unum Group, which provides financial protection benefit solutions, sports a Zacks Rank #1 and has an expected EPS growth rate of 8.4% for three-five years. The company has a trailing four-quarter earnings surprise of 18.6%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Unum Group’s current financial year sales and EPS suggests growth of 2.5% and 19.2%, respectively, from the year-ago period. UNUM Group has a Value Score of A. Shares of UNM have gained 29.4% in the past year.
General Motors, which designs, builds, and sells cars, trucks, crossovers, and automobile parts globally, flaunts a Zacks Rank #1. It has an expected EPS growth rate of 9.9% for three-five years. The company has a trailing four-quarter earnings surprise of 15.5%, on average.
The Zacks Consensus Estimate for General Motors’ current financial year sales suggests growth of 4.5% from the year-ago period. General Motors has a Value Score of A. Shares of GM have risen 2.4% in the past year.
American International Group, which offers insurance products for commercial, institutional, and individual customers, carries a Zacks Rank #1 and has an expected EPS growth rate of 10% for three-five years. The company has a trailing four-quarter earnings surprise of 9.2%, on average.
The Zacks Consensus Estimate for American International Group’s current financial year sales and EPS suggests growth of 8.5% and 44.2%, respectively, from the year-ago period. AIG has a Value Score of A. Shares of AIG have gained 6% in the past year.
G-III Apparel, which designs, sources, and markets women’s and men’s apparel, carries a Zacks Rank #1. It has an expected EPS growth rate of 15% for three-five years. The company has a trailing four-quarter earnings surprise of 47.4%, on average.
The Zacks Consensus Estimate for G-III Apparel’s current financial-year sales suggests growth of 0.1% from the year-ago period. G-III Apparel has a Value Score of A. The stock has fallen 18.1% 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/2106262/4-stocks-with-low-price-to-cash-flow-ratio-to-buy-now
Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.
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American International Group, Inc. (AIG) : Free Stock Analysis Report
Unum Group (UNM): Free Stock Analysis Report
General Motors Company (GM): Free Stock Analysis Report
G-III Apparel Group, LTD. (GIII) : Free Stock Analysis Report
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