Should Value Investors Buy TreeHouse Foods Stock?

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.

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 rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

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 TreeHouse Foods THS. THS is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock is trading with a P/E ratio of 14.45, which compares to its industry's average of 15.56. Over the past year, THS's Forward P/E has been as high as 18.35 and as low as 13.41, with a median of 15.81.

Investors should also recognize that THS has a P/B ratio of 1.25. 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 stock's P/B looks solid versus its industry's average P/B of 2.07. Over the past year, THS's P/B has been as high as 1.70 and as low as 1.16, with a median of 1.35.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by 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. THS has a P/S ratio of 0.61. This compares to its industry's average P/S of 0.9.

Finally, our model also underscores that THS has a P/CF ratio of 12.18. 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. THS's P/CF compares to its industry's average P/CF of 15.33. Within the past 12 months, THS's P/CF has been as high as 85.40 and as low as 10.04, with a median of 12.09.

These are only a few of the key metrics included in TreeHouse Foods'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, THS looks like an impressive value stock at the moment.

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