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 to watch right now is Sensata Technologies Holding (ST). ST is currently sporting a Zacks Rank #2 (Buy), as well as an A grade for Value. The stock has a Forward P/E ratio of 9.63. This compares to its industry's average Forward P/E of 18.52. Over the past 52 weeks, ST's Forward P/E has been as high as 10.18 and as low as 5.38, with a median of 8.90.
Investors will also notice that ST has a PEG ratio of 1.31. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. ST's PEG compares to its industry's average PEG of 2.22. Over the last 12 months, ST's PEG has been as high as 1.37 and as low as 0.72, with a median of 1.12.
Another valuation metric that we should highlight is ST's P/B ratio of 1.7. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. ST's current P/B looks attractive when compared to its industry's average P/B of 3.78. Over the past 12 months, ST's P/B has been as high as 1.96 and as low as 0.91, with a median of 1.53.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a preferred metric because revenue can't really be manipulated, so sales are often a truer performance indicator. ST has a P/S ratio of 1.24. This compares to its industry's average P/S of 2.79.
Finally, our model also underscores that ST has a P/CF ratio of 8.47. 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. ST's P/CF compares to its industry's average P/CF of 18.80. ST's P/CF has been as high as 9.40 and as low as 4.54, with a median of 7.12, all within the past year.
These are only a few of the key metrics included in Sensata Technologies Holding'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, ST looks like an impressive value stock at the moment.
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
Sensata Technologies Holding N.V. (ST): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
Zacks Investment Research
