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.
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 rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.
One company value investors might notice is Toro (TTC). TTC is currently sporting a Zacks Rank #2 (Buy), as well as a Value grade of A.
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 preferred metric because revenue can't really be manipulated, so sales are often a truer performance indicator. TTC has a P/S ratio of 1.61. This compares to its industry's average P/S of 1.67.
Finally, investors should note that TTC has a P/CF ratio of 16.65. 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. TTC's P/CF compares to its industry's average P/CF of 19.14. TTC's P/CF has been as high as 17.57 and as low as 12.04, with a median of 15.25, all within the past year.
These are only a few of the key metrics included in Toro'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, TTC looks like an impressive value stock at the moment.
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Toro Company (The) (TTC): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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