Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.
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.
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 GMS (GMS). GMS is currently sporting a Zacks Rank #2 (Buy) and an A for Value.
We should also highlight that GMS has a P/B ratio of 2.94. 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. GMS's current P/B looks attractive when compared to its industry's average P/B of 2.95. Over the past 12 months, GMS's P/B has been as high as 2.97 and as low as 1.86, with a median of 2.32.
Value investors also use the P/S ratio. The P/S ratio is calculated as price divided by sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. GMS has a P/S ratio of 0.76. This compares to its industry's average P/S of 0.83.
These are only a few of the key metrics included in GMS'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, GMS looks like an impressive value stock at the moment.
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GMS Inc. (GMS): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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