Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.
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 use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
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 Macy's (M). M is currently sporting a Zacks Rank #1 (Strong Buy) and an A for Value. The stock is trading with P/E ratio of 9.5 right now. For comparison, its industry sports an average P/E of 15.62. Over the last 12 months, M's Forward P/E has been as high as 9.57 and as low as 4.69, with a median of 6.12.
Another notable valuation metric for M is its P/B ratio of 1.05. 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 2.15. M's P/B has been as high as 1.21 and as low as 0.61, with a median of 0.86, over the past year.
Finally, our model also underscores that M has a P/CF ratio of 3.44. 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. M's P/CF compares to its industry's average P/CF of 7.14. Over the past 52 weeks, M's P/CF has been as high as 4.77 and as low as 1.92, with a median of 2.70.
These are just a handful of the figures considered in Macy's'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 M is an impressive value stock right now.
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Macy's, Inc. (M): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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