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 rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
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 company to watch right now is Polaris (PII). PII is currently sporting a Zacks Rank #1 (Strong Buy) and an A for Value. The stock is trading with P/E ratio of 63.95 right now. For comparison, its industry sports an average P/E of 97.56. Over the past year, PII's Forward P/E has been as high as 268.23 and as low as -274.34, with a median of 17.77.
Investors will also notice that PII has a PEG ratio of 3.04. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. PII's industry has an average PEG of 7.45 right now. Over the last 12 months, PII's PEG has been as high as 12.82 and as low as 3.04, with a median of 6.01.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. PII has a P/S ratio of 0.52. This compares to its industry's average P/S of 0.63.
Value investors will likely look at more than just these metrics, but the above data helps show that Polaris is likely undervalued currently. And when considering the strength of its earnings outlook, PII sticks out as one of the market's strongest value stocks.
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Polaris Inc. (PII): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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