Is Cable One (CABO) Stock Undervalued 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, 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 fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

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.

Cable One (CABO) is a stock many investors are watching right now. CABO 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 4.46. This compares to its industry's average Forward P/E of 6.96. Over the past year, CABO's Forward P/E has been as high as 11.64 and as low as 3.61, with a median of 8.02.

Another valuation metric that we should highlight is CABO's P/B ratio of 0.64. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. This stock's P/B looks attractive against its industry's average P/B of 1.65. Within the past 52 weeks, CABO's P/B has been as high as 1.27 and as low as 0.40, with a median of 0.92.

Value investors also use the P/S ratio. The P/S ratio is calculated as price divided by sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. CABO has a P/S ratio of 0.5. This compares to its industry's average P/S of 0.69.

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

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

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