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 rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
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 Synchrony Financial (SYF). SYF is currently sporting a Zacks Rank #2 (Buy), as well as a Value grade of A. The stock has a Forward P/E ratio of 8.48. This compares to its industry's average Forward P/E of 24.46. Over the last 12 months, SYF's Forward P/E has been as high as 10.68 and as low as 5.52, with a median of 8.36.
We also note that SYF holds a PEG ratio of 0.71. 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. SYF's PEG compares to its industry's average PEG of 1.33. Over the past 52 weeks, SYF's PEG has been as high as 1.31 and as low as 0.48, with a median of 0.70.
Another notable valuation metric for SYF is its P/B ratio of 1.78. The P/B is a method of comparing a stock's market value to 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 3.59. SYF's P/B has been as high as 1.82 and as low as 1.09, with a median of 1.58, over 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. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. SYF has a P/S ratio of 1.25. This compares to its industry's average P/S of 2.47.
Finally, we should also recognize that SYF has a P/CF ratio of 7.55. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 19.51. Within the past 12 months, SYF's P/CF has been as high as 7.72 and as low as 4.94, with a median of 6.66.
These are only a few of the key metrics included in Synchrony 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, SYF looks like an impressive value stock at the moment.
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Synchrony Financial (SYF): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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