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 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 Freightcar America (RAIL). RAIL is currently sporting a Zacks Rank #2 (Buy) and an A for Value. The stock is trading with P/E ratio of 13.64 right now. For comparison, its industry sports an average P/E of 13.87. Over the last 12 months, RAIL's Forward P/E has been as high as 55.11 and as low as 5.99, with a median of 14.39.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a preferred metric because revenue can't really be manipulated, so sales are often a truer performance indicator. RAIL has a P/S ratio of 0.35. This compares to its industry's average P/S of 1.03.
These are only a few of the key metrics included in Freightcar America'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, RAIL looks like an impressive value stock at the moment.
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Freightcar America, Inc. (RAIL): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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