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, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. 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 Ranger Energy Services (RNGR). RNGR is currently holding a Zacks Rank #1 (Strong Buy) and a Value grade of A. The stock holds a P/E ratio of 10.47, while its industry has an average P/E of 14.54. Over the last 12 months, RNGR's Forward P/E has been as high as 15.77 and as low as 9.48, with a median of 10.74.
Investors should also recognize that RNGR has a P/B ratio of 1.1. The P/B ratio pits a stock's market value against 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 1.94. RNGR's P/B has been as high as 1.47 and as low as 0.88, with a median of 1.06, over the past year.
Value investors also use the P/S ratio. The P/S ratio is calculated as price divided by sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. RNGR has a P/S ratio of 0.52. This compares to its industry's average P/S of 0.72.
Finally, we should also recognize that RNGR has a P/CF ratio of 4.82. 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. This company's current P/CF looks solid when compared to its industry's average P/CF of 6.77. Over the past 52 weeks, RNGR's P/CF has been as high as 6.63 and as low as 3.89, with a median of 4.75.
These are just a handful of the figures considered in Ranger Energy Services'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 RNGR is an impressive value stock right now.
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Ranger Energy Services, Inc. (RNGR): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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