Should Value Investors Buy Darling Ingredients (DAR) 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, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
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 Darling Ingredients (DAR). DAR 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 11.46, while its industry has an average P/E of 19.26. Over the last 12 months, DAR's Forward P/E has been as high as 44.81 and as low as 8.29, with a median of 21.24.
Another notable valuation metric for DAR is its P/B ratio of 1.18. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. DAR's current P/B looks attractive when compared to its industry's average P/B of 2.20. DAR's P/B has been as high as 1.94 and as low as 0.87, with a median of 1.41, over the past year.
Value investors also use the P/S ratio. The P/S ratio is 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. DAR has a P/S ratio of 0.93. This compares to its industry's average P/S of 1.05.
Value investors will likely look at more than just these metrics, but the above data helps show that Darling Ingredients is likely undervalued currently. And when considering the strength of its earnings outlook, DAR sticks out at as one of the market's strongest value stocks.
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