Should Value Investors Pick Consolidated-Tomoka (CTO) Stock Right Now?

Source: Zacks Investment Research

Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?

One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Consolidated-Tomoka Land Co. (CTO – Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:

PE Ratio

A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.

On this front, Consolidated-Tomoka has a trailing twelve months PE ratio of 10.47, as you can see in the chart below:

This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 stands at about 20.04. If we focus on the long-term PE trend, Consolidated-Tomoka’s current PE level puts it below its midpoint over the past five years.

Further, the stock’s PE also compares favorably with the industry’s trailing twelve months PE ratio, which stands at 21.52. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.

We should also point out that Consolidated-Tomoka has a forward PE ratio (price relative to this year’s earnings) of just 14.98, so it is fair to say that a slightly less value-oriented path may be ahead for Consolidated-Tomoka stock in the near term too.

P/CF Ratio

An often overlooked ratio that can still be a great indicator of value is the price/cash flow metric. This ratio doesn’t take amortization and depreciation into account, so can give a more accurate picture of the financial health in a…

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