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.
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 Norwegian Cruise Line (NCLH). NCLH is currently sporting a Zacks Rank #1 (Strong Buy), as well as a Value grade of A. The stock is trading with a P/E ratio of 10.27, which compares to its industry's average of 17.96. NCLH's Forward P/E has been as high as 15.63 and as low as 6.93, with a median of 10.77, all within the past year.
We also note that NCLH holds a PEG ratio of 0.84. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. NCLH's industry has an average PEG of 0.91 right now. Over the last 12 months, NCLH's PEG has been as high as 0.93 and as low as 0.15, with a median of 0.24.
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. NCLH has a P/S ratio of 1.16. This compares to its industry's average P/S of 1.26.
Finally, investors will want to recognize that NCLH has a P/CF ratio of 6.57. 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. NCLH's current P/CF looks attractive when compared to its industry's average P/CF of 14.57. Within the past 12 months, NCLH's P/CF has been as high as 9.67 and as low as 3.73, with a median of 6.53.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Norwegian Cruise Line is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, NCLH feels like a great value stock at the moment.
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Norwegian Cruise Line Holdings Ltd. (NCLH): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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