Are Investors Undervaluing BMC (BMCH) Right Now?

Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

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.

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 BMC (BMCH). BMCH is currently sporting a Zacks Rank of #1 (Strong Buy) and an A for Value. The stock is trading with P/E ratio of 13.69 right now. For comparison, its industry sports an average P/E of 19.86. BMCH's Forward P/E has been as high as 14.47 and as low as 8.47, with a median of 11.69, all within the past year.

Finally, our model also underscores that BMCH has a P/CF ratio of 9.28. 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. BMCH's current P/CF looks attractive when compared to its industry's average P/CF of 14.31. Over the past 52 weeks, BMCH's P/CF has been as high as 9.32 and as low as 5.62, with a median of 6.93.

Value investors will likely look at more than just these metrics, but the above data helps show that BMC is likely undervalued currently. And when considering the strength of its earnings outlook, BMCH sticks out at as one of the market's strongest value stocks.