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 a variety of methods, including tried-and-true valuation metrics, to find these stocks.
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 to watch right now is Cenovus Energy (CVE). CVE is currently sporting a Zacks Rank #1 (Strong Buy), as well as a Value grade of A. The stock has a Forward P/E ratio of 12.78. This compares to its industry's average Forward P/E of 14.60. Over the past 52 weeks, CVE's Forward P/E has been as high as 15.19 and as low as 6.47, with a median of 10.45.
Another notable valuation metric for CVE is its P/B ratio of 1.44. 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 1.57. Over the past year, CVE's P/B has been as high as 1.57 and as low as 0.93, with a median of 1.27.
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. CVE has a P/S ratio of 0.81. This compares to its industry's average P/S of 1.05.
Finally, we should also recognize that CVE has a P/CF ratio of 5.63. 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. CVE's current P/CF looks attractive when compared to its industry's average P/CF of 5.86. Within the past 12 months, CVE's P/CF has been as high as 5.82 and as low as 3.46, with a median of 4.49.
These are only a few of the key metrics included in Cenovus Energy'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, CVE looks like an impressive value stock at the moment.
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Cenovus Energy Inc (CVE): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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