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.
Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader 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.
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 company to watch right now is Cable One (CABO). CABO is currently sporting a Zacks Rank #2 (Buy), as well as an A grade for Value. The stock has a Forward P/E ratio of 4.01. This compares to its industry's average Forward P/E of 7.12. Over the past year, CABO's Forward P/E has been as high as 11.51 and as low as 3.61, with a median of 7.72.
Investors should also recognize that CABO has a P/B ratio of 0.69. 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 1.52. Within the past 52 weeks, CABO's P/B has been as high as 1.27 and as low as 0.40, with a median of 0.86.
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. CABO has a P/S ratio of 0.59. This compares to its industry's average P/S of 0.75.
Value investors will likely look at more than just these metrics, but the above data helps show that Cable One is likely undervalued currently. And when considering the strength of its earnings outlook, CABO sticks out as one of the market's strongest value stocks.
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Cable One, Inc. (CABO): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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