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.
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 a variety of methods, including tried-and-true valuation metrics, to find these stocks.
Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.
One stock to keep an eye on is Progress Software (PRGS). PRGS is currently sporting a Zacks Rank #2 (Buy) and an A for Value.
We also note that PRGS holds a PEG ratio of 1.49. 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. PRGS's PEG compares to its industry's average PEG of 2.24. Over the past 52 weeks, PRGS's PEG has been as high as 7.23 and as low as 1.47, with a median of 2.21.
We should also highlight that PRGS has a P/B ratio of 4. The P/B ratio is used to compare a stock's market value with 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 9.31. Within the past 52 weeks, PRGS's P/B has been as high as 7.05 and as low as 3.95, with a median of 5.89.
Value investors also use the P/S ratio. The P/S ratio is calculated as price divided by sales. This is a preferred metric because revenue can't really be manipulated, so sales are often a truer performance indicator. PRGS has a P/S ratio of 2. This compares to its industry's average P/S of 4.38.
Finally, investors will want to recognize that PRGS has a P/CF ratio of 9.86. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 23.56. Over the past 52 weeks, PRGS's P/CF has been as high as 18.02 and as low as 9.74, with a median of 14.83.
Value investors will likely look at more than just these metrics, but the above data helps show that Progress Software is likely undervalued currently. And when considering the strength of its earnings outlook, PRGS sticks out as one of the market's strongest value stocks.
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Progress Software Corporation (PRGS): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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