The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.
Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.
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 value investors might notice is Ringcentral (RNG). RNG is currently sporting a Zacks Rank #2 (Buy), as well as an A grade for Value.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's 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. RNG has a P/S ratio of 1.08. This compares to its industry's average P/S of 1.66.
Finally, we should also recognize that RNG has a P/CF ratio of 7.69. 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. RNG's current P/CF looks attractive when compared to its industry's average P/CF of 21.44. RNG's P/CF has been as high as 13.21 and as low as 5.59, with a median of 9.59, all within the past year.
These are only a few of the key metrics included in Ringcentral's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, RNG looks like an impressive value stock at the moment.
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Ringcentral, Inc. (RNG): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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