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.
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 tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
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 Dentsply Sirona (XRAY). XRAY is currently holding a Zacks Rank #2 (Buy) and a Value grade of A. The stock is trading with a P/E ratio of 7.25, which compares to its industry's average of 15.94. Over the past year, XRAY's Forward P/E has been as high as 12.32 and as low as 6.77, with a median of 9.57.
Investors will also notice that XRAY has a PEG ratio of 0.98. 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. XRAY's industry has an average PEG of 1.67 right now. XRAY's PEG has been as high as 1.91 and as low as 0.84, with a median of 1.11, all within 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. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. XRAY has a P/S ratio of 0.77. This compares to its industry's average P/S of 1.22.
Finally, we should also recognize that XRAY has a P/CF ratio of 13.81. 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. XRAY's current P/CF looks attractive when compared to its industry's average P/CF of 16.87. Within the past 12 months, XRAY's P/CF has been as high as 19.05 and as low as 7.83, with a median of 13.42.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Dentsply Sirona is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, XRAY feels like a great value stock at the moment.
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DENTSPLY SIRONA Inc. (XRAY): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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