Are Investors Undervaluing Central Garden & Pet (CENTA) Right Now?

While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

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 to watch right now is Central Garden & Pet (CENTA). CENTA is currently sporting a Zacks Rank #2 (Buy) and an A for Value. The stock is trading with a P/E ratio of 11.58, which compares to its industry's average of 15.10. Over the past year, CENTA's Forward P/E has been as high as 16.39 and as low as 11.42, with a median of 13.11.

Another valuation metric that we should highlight is CENTA's P/B ratio of 1.24. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. CENTA's current P/B looks attractive when compared to its industry's average P/B of 2.47. CENTA's P/B has been as high as 1.58 and as low as 1.20, with a median of 1.35, over the past year.

These are only a few of the key metrics included in Central Garden & Pet'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, CENTA 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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