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 a variety of methods, including tried-and-true valuation metrics, to find these stocks.
Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.
ADT (ADT) is a stock many investors are watching right now. ADT is currently sporting a Zacks Rank #1 (Strong Buy), as well as an A grade for Value. The stock is trading with a P/E ratio of 9.79, which compares to its industry's average of 18.43. Over the last 12 months, ADT's Forward P/E has been as high as 10.52 and as low as 8.31, with a median of 9.37.
Another valuation metric that we should highlight is ADT's P/B ratio of 1.99. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. ADT's current P/B looks attractive when compared to its industry's average P/B of 5.93. Over the past 12 months, ADT's P/B has been as high as 1.99 and as low as 1.56, with a median of 1.78.
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. ADT has a P/S ratio of 1.42. This compares to its industry's average P/S of 2.08.
These are just a handful of the figures considered in ADT's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that ADT is an impressive value stock right now.
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ADT Inc. (ADT): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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