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.
Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.
On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.
One stock to keep an eye on is Maximus (MMS). MMS is currently sporting a Zacks Rank #2 (Buy), as well as a Value grade of A. The stock is trading with a P/E ratio of 11.25, which compares to its industry's average of 12.87. MMS's Forward P/E has been as high as 15.98 and as low as 10.58, with a median of 12.49, all within the past year.
Another notable valuation metric for MMS is its P/B ratio of 2.4. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. MMS's current P/B looks attractive when compared to its industry's average P/B of 3.22. Over the past year, MMS's P/B has been as high as 3.11 and as low as 2.22, with a median of 2.46.
Value investors also use the P/S ratio. The P/S ratio is calculated as price divided by sales. This is a preferred metric because revenue can't really be manipulated, so sales are often a truer performance indicator. MMS has a P/S ratio of 0.75. This compares to its industry's average P/S of 0.77.
Finally, investors will want to recognize that MMS has a P/CF ratio of 9.39. 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. This stock's P/CF looks attractive against its industry's average P/CF of 18.99. MMS's P/CF has been as high as 13.25 and as low as 8.67, with a median of 10.22, all within the past year.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Maximus is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, MMS feels like a great value stock at the moment.
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Maximus, Inc. (MMS): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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