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 AZZ (AZZ). AZZ is currently sporting a Zacks Rank #2 (Buy) and an A for Value. The stock holds a P/E ratio of 17.97, while its industry has an average P/E of 22.83. Over the past year, AZZ's Forward P/E has been as high as 19.02 and as low as 12.87, with a median of 15.45.
We also note that AZZ holds a PEG ratio of 1.03. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. AZZ's industry has an average PEG of 2.16 right now. Over the last 12 months, AZZ's PEG has been as high as 1.27 and as low as 0.92, with a median of 1.07.
Another valuation metric that we should highlight is AZZ's P/B ratio of 2.82. 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 company's current P/B looks solid when compared to its industry's average P/B of 4.91. AZZ's P/B has been as high as 2.95 and as low as 2.16, with a median of 2.52, over the past year.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's 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. AZZ has a P/S ratio of 2.11. This compares to its industry's average P/S of 2.45.
Finally, investors should note that AZZ has a P/CF ratio of 9.66. 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. AZZ's P/CF compares to its industry's average P/CF of 21.66. AZZ's P/CF has been as high as 13.51 and as low as 7.42, with a median of 11.34, all within the past year.
These figures are just a handful of the metrics value investors tend to look at, but they help show that AZZ is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, AZZ feels like a great value stock at the moment.
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AZZ Inc. (AZZ): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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