Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.
Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.
One company to watch right now is PG&E (PCG). PCG is currently sporting a Zacks Rank #2 (Buy), as well as a Value grade of A. The stock is trading with P/E ratio of 9.36 right now. For comparison, its industry sports an average P/E of 15.44. Over the last 12 months, PCG's Forward P/E has been as high as 14.79 and as low as 8.28, with a median of 10.97.
PCG is also sporting a PEG ratio of 1.05. 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. PCG's PEG compares to its industry's average PEG of 1.86. Over the last 12 months, PCG's PEG has been as high as 1.54 and as low as 0.88, with a median of 1.13.
Another valuation metric that we should highlight is PCG's P/B ratio of 1.34. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. This stock's P/B looks solid versus its industry's average P/B of 2.71. Over the past 12 months, PCG's P/B has been as high as 2.09 and as low as 1.16, with a median of 1.54.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. PCG has a P/S ratio of 1.75. This compares to its industry's average P/S of 2.49.
Finally, investors will want to recognize that PCG has a P/CF ratio of 4.89. 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. PCG's P/CF compares to its industry's average P/CF of 13.20. Over the past year, PCG's P/CF has been as high as 6.87 and as low as 4.26, with a median of 5.49.
Value investors will likely look at more than just these metrics, but the above data helps show that PG&E is likely undervalued currently. And when considering the strength of its earnings outlook, PCG sticks out as one of the market's strongest value stocks.
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Pacific Gas & Electric Co. (PCG): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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