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.
Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
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 stock to keep an eye on is NatWest Group (NWG). NWG is currently sporting a Zacks Rank #2 (Buy), as well as an A grade for Value. The stock has a Forward P/E ratio of 7.89. This compares to its industry's average Forward P/E of 10.24. NWG's Forward P/E has been as high as 9.78 and as low as 6.88, with a median of 8.20, all within the past year.
We should also highlight that NWG has a P/B ratio of 1. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. NWG's current P/B looks attractive when compared to its industry's average P/B of 2.23. Over the past 12 months, NWG's P/B has been as high as 1.11 and as low as 0.73, with a median of 0.94.
Value investors also use the P/S ratio. The P/S ratio is calculated as price divided by sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. NWG has a P/S ratio of 1.61. This compares to its industry's average P/S of 1.75.
These are only a few of the key metrics included in NatWest Group's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, NWG looks like an impressive value stock at the moment.
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NatWest Group plc (NWG): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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