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 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 value investors might notice is Virtu Financial (VIRT). VIRT is currently sporting a Zacks Rank #1 (Strong Buy), as well as a Value grade of A. The stock is trading with P/E ratio of 9.2 right now. For comparison, its industry sports an average P/E of 24.51. Over the past year, VIRT's Forward P/E has been as high as 12.61 and as low as 8.89, with a median of 10.59.
Investors should also note that VIRT holds a PEG ratio of 0.53. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. VIRT's industry has an average PEG of 1.33 right now. VIRT's PEG has been as high as 1.53 and as low as 0.40, with a median of 0.56, all within the past year.
Value investors also use the P/S ratio. The P/S ratio is calculated as price divided by sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. VIRT has a P/S ratio of 1.76. This compares to its industry's average P/S of 2.2.
Finally, we should also recognize that VIRT has a P/CF ratio of 6.60. 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. VIRT's P/CF compares to its industry's average P/CF of 19.51. Over the past 52 weeks, VIRT's P/CF has been as high as 9.71 and as low as 6.10, with a median of 7.66.
These are only a few of the key metrics included in Virtu Financial'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, VIRT looks like an impressive value stock at the moment.
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Virtu Financial, Inc. (VIRT): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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