The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.
Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.
One stock to keep an eye on is Rio Tinto (RIO). RIO is currently holding a Zacks Rank #2 (Buy) and a Value grade of A. The stock holds a P/E ratio of 9.99, while its industry has an average P/E of 16.50. RIO's Forward P/E has been as high as 10.78 and as low as 8.49, with a median of 9.64, all within the past year.
RIO is also sporting a PEG ratio of 0.37. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. RIO's PEG compares to its industry's average PEG of 0.53. Over the last 12 months, RIO's PEG has been as high as 0.43 and as low as 0.35, with a median of 0.39.
Investors should also recognize that RIO has a P/B ratio of 1.26. Investors use the P/B ratio to look at a stock's market value versus 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 1.77. Within the past 52 weeks, RIO's P/B has been as high as 1.56 and as low as 1.13, with a median of 1.31.
Value investors will likely look at more than just these metrics, but the above data helps show that Rio Tinto is likely undervalued currently. And when considering the strength of its earnings outlook, RIO sticks out as one of the market's strongest value stocks.
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Rio Tinto PLC (RIO): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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