While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.
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.
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.
One company to watch right now is Teradata (TDC). TDC is currently sporting a Zacks Rank #2 (Buy), as well as an A grade for Value. The stock is trading with P/E ratio of 9.88 right now. For comparison, its industry sports an average P/E of 18.50. Over the last 12 months, TDC's Forward P/E has been as high as 14.65 and as low as 8.41, with a median of 11.93.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. TDC has a P/S ratio of 1.2. This compares to its industry's average P/S of 1.49.
Finally, investors should note that TDC has a P/CF ratio of 9.39. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. TDC's P/CF compares to its industry's average P/CF of 21. TDC's P/CF has been as high as 19.80 and as low as 8.10, with a median of 14.41, all within the past year.
Value investors will likely look at more than just these metrics, but the above data helps show that Teradata is likely undervalued currently. And when considering the strength of its earnings outlook, TDC sticks out as one of the market's strongest value stocks.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Teradata Corporation (TDC): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
Zacks Investment Research
