Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.
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 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 to watch right now is AZZ (AZZ). AZZ is currently sporting a Zacks Rank #2 (Buy), as well as an A grade for Value. The stock is trading with a P/E ratio of 17.91, which compares to its industry's average of 23.15. Over the past year, AZZ's Forward P/E has been as high as 17.91 and as low as 12.87, with a median of 15.19.
AZZ is also sporting a PEG ratio of 1.03. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. AZZ's PEG compares to its industry's average PEG of 2.25. AZZ's PEG has been as high as 1.27 and as low as 0.92, with a median of 1.07, all within the past year.
Investors should also recognize that AZZ has a P/B ratio of 3.04. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. AZZ's current P/B looks attractive when compared to its industry's average P/B of 4.87. AZZ's P/B has been as high as 3.69 and as low as 2.16, with a median of 2.55, over the past year.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. AZZ has a P/S ratio of 2.01. This compares to its industry's average P/S of 2.37.
Finally, we should also recognize that AZZ has a P/CF ratio of 12.06. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. AZZ's current P/CF looks attractive when compared to its industry's average P/CF of 21.28. AZZ's P/CF has been as high as 13.67 and as low as 9.44, with a median of 11.51, all within the past year.
Value investors will likely look at more than just these metrics, but the above data helps show that AZZ is likely undervalued currently. And when considering the strength of its earnings outlook, AZZ sticks out as one of the market's strongest value stocks.
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AZZ Inc. (AZZ): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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