The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.
Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.
The Cheesecake Factory (CAKE) is a stock many investors are watching right now. CAKE is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock holds a P/E ratio of 13.17, while its industry has an average P/E of 25.54. CAKE's Forward P/E has been as high as 14.13 and as low as 10.04, with a median of 11.49, all within the past year.
CAKE is also sporting a PEG ratio of 1.19. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. CAKE's industry currently sports an average PEG of 1.81. CAKE's PEG has been as high as 1.28 and as low as 0.54, with a median of 1.08, all within the past year.
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. CAKE has a P/S ratio of 0.68. This compares to its industry's average P/S of 0.71.
Finally, investors will want to recognize that CAKE has a P/CF ratio of 10.33. 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. This stock's P/CF looks attractive against its industry's average P/CF of 22.26. Within the past 12 months, CAKE's P/CF has been as high as 11.06 and as low as 7.85, with a median of 8.91.
These are only a few of the key metrics included in The Cheesecake Factory'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, CAKE looks like an impressive value stock at the moment.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
