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 Eldorado Gold (EGO). EGO is currently sporting a Zacks Rank #2 (Buy), as well as an A grade for Value. The stock is trading with a P/E ratio of 10.46, which compares to its industry's average of 16.55. Over the last 12 months, EGO's Forward P/E has been as high as 13.31 and as low as 7.84, with a median of 9.89.
Investors will also notice that EGO has a PEG ratio of 0.29. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. EGO's PEG compares to its industry's average PEG of 0.58. EGO's PEG has been as high as 1.33 and as low as 0.25, with a median of 0.30, all within the past year.
Another valuation metric that we should highlight is EGO's P/B ratio of 1.39. 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 2.95. Over the past 12 months, EGO's P/B has been as high as 1.41 and as low as 0.71, with a median of 0.95.
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. EGO has a P/S ratio of 3.66. This compares to its industry's average P/S of 4.92.
Finally, we should also recognize that EGO has a P/CF ratio of 8.53. 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 stock's P/CF looks attractive against its industry's average P/CF of 13.15. EGO's P/CF has been as high as 8.63 and as low as 5.08, with a median of 6.38, all within the past year.
These are just a handful of the figures considered in Eldorado Gold's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that EGO is an impressive value stock right now.
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Eldorado Gold Corporation (EGO): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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