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, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
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 stock to keep an eye on is Phibro Animal Health (PAHC). PAHC is currently sporting a Zacks Rank of #1 (Strong Buy), as well as an A grade for Value. The stock is trading with a P/E ratio of 10.48, which compares to its industry's average of 21.49. PAHC's Forward P/E has been as high as 15.21 and as low as 10, with a median of 12.76, all within the past year.
Investors should also recognize that PAHC has a P/B ratio of 3.56. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. This stock's P/B looks attractive against its industry's average P/B of 5.20. Within the past 52 weeks, PAHC's P/B has been as high as 4.30 and as low as 1.87, with a median of 3.36.
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. PAHC has a P/S ratio of 0.79. This compares to its industry's average P/S of 1.37.
Finally, investors should note that PAHC has a P/CF ratio of 14.78. 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 company's current P/CF looks solid when compared to its industry's average P/CF of 35.17. Within the past 12 months, PAHC's P/CF has been as high as 22.96 and as low as 10.14, with a median of 16.12.
These are only a few of the key metrics included in Phibro Animal Health'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, PAHC looks like an impressive value stock at the moment.
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Phibro Animal Health Corporation (PAHC): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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