Should Value Investors Buy RPC (RES) Stock?

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 rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

One company to watch right now is RPC (RES). RES is currently sporting a Zacks Rank #2 (Buy) and an A for Value.

Value investors also use the P/S ratio. The P/S ratio is calculated as price divided by sales. This is a preferred metric because revenue can't really be manipulated, so sales are often a truer performance indicator. RES has a P/S ratio of 0.81. This compares to its industry's average P/S of 1.38.

Finally, investors will want to recognize that RES has a P/CF ratio of 4.93. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 11.15. RES's P/CF has been as high as 6.73 and as low as 4.33, with a median of 5.19, all within the past year.

Value investors will likely look at more than just these metrics, but the above data helps show that RPC is likely undervalued currently. And when considering the strength of its earnings outlook, RES 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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