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.
Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.
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 company to watch right now is Encore Capital Group (ECPG). ECPG is currently sporting a Zacks Rank #1 (Strong Buy) and an A for Value. The stock holds a P/E ratio of 5.46, while its industry has an average P/E of 9.33. Over the past 52 weeks, ECPG's Forward P/E has been as high as 9.37 and as low as 4.14, with a median of 5.49.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. ECPG has a P/S ratio of 0.7. This compares to its industry's average P/S of 1.27.
Finally, our model also underscores that ECPG has a P/CF ratio of 17.23. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 27.43. Within the past 12 months, ECPG's P/CF has been as high as 99.38 and as low as 10.25, with a median of 17.11.
Value investors will likely look at more than just these metrics, but the above data helps show that Encore Capital Group is likely undervalued currently. And when considering the strength of its earnings outlook, ECPG sticks out as one of the market's strongest value stocks.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Encore Capital Group Inc (ECPG): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
Zacks Investment Research
