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.
Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
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.
Nordstrom (JWN) is a stock many investors are watching right now. JWN is currently sporting a Zacks Rank of #1 (Strong Buy) and an A for Value. The stock has a Forward P/E ratio of 11.11. This compares to its industry's average Forward P/E of 13.63. JWN's Forward P/E has been as high as 13.36 and as low as 9.83, with a median of 11.98, all within the past year.
Another valuation metric that we should highlight is JWN's P/B ratio of 3.47. 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 4.51. JWN's P/B has been as high as 4.65 and as low as 3.39, with a median of 3.88, 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. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. JWN has a P/S ratio of 0.26. This compares to its industry's average P/S of 0.36.
Finally, our model also underscores that JWN has a P/CF ratio of 6.45. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 12.41. Over the past year, JWN's P/CF has been as high as 6.59 and as low as 3.12, with a median of 5.83.
Urban Outfitters (URBN) may be another strong Retail - Apparel and Shoes stock to add to your shortlist. URBN is a # 2 (Buy) stock with a Value grade of A.
Shares of Urban Outfitters currently holds a Forward P/E ratio of 9.59, and its PEG ratio is 1.10. In comparison, its industry sports average P/E and PEG ratios of 13.63 and 1.09.
Over the past year, URBN's P/E has been as high as 14.69, as low as 9.02, with a median of 11.35; its PEG ratio has been as high as 1.49, as low as 0.57, with a median of 2.45 during the same time period.
Urban Outfitters sports a P/B ratio of 1.69 as well; this compares to its industry's price-to-book ratio of 4.51. In the past 52 weeks, URBN's P/B has been as high as 2.37, as low as 1.40, with a median of 1.82.
These are only a few of the key metrics included in Nordstrom and Urban Outfitters strong Value grade, but they help show that the stocks are likely undervalued right now. When factoring in the strength of its earnings outlook, JWN and URBN look like an impressive value stock at the moment.
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Nordstrom, Inc. (JWN): Free Stock Analysis Report Urban Outfitters, Inc. (URBN): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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