Are Investors Undervaluing Cardinal Health (CAH) Right Now?

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.

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. 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.

One company value investors might notice is Cardinal Health (CAH). CAH is currently sporting a Zacks Rank #2 (Buy), as well as a Value grade of A. The stock has a Forward P/E ratio of 15.48. This compares to its industry's average Forward P/E of 17.74. Over the past 52 weeks, CAH's Forward P/E has been as high as 20.15 and as low as 13.69, with a median of 15.30.

Investors will also notice that CAH has a PEG ratio of 1.24. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. CAH's PEG compares to its industry's average PEG of 1.95. Within the past year, CAH's PEG has been as high as 1.88 and as low as 1.22, with a median of 1.49.

Finally, investors should note that CAH has a P/CF ratio of 15.27. 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. CAH's P/CF compares to its industry's average P/CF of 18.89. Over the past 52 weeks, CAH's P/CF has been as high as 17.47 and as low as 12.96, with a median of 15.12.

These are only a few of the key metrics included in Cardinal Health'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, CAH looks like an impressive value stock at the moment.

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This article originally published on Zacks Investment Research (zacks.com).

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