Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.
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 use a variety of methods, including tried-and-true valuation metrics, to find these stocks.
In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.
One company value investors might notice is XP (XP). XP is currently sporting a Zacks Rank #2 (Buy), as well as an A grade for Value. The stock is trading with a P/E ratio of 10.43, which compares to its industry's average of 24.19. Over the last 12 months, XP's Forward P/E has been as high as 12.34 and as low as 1.97, with a median of 9.21.
We also note that XP holds a PEG ratio of 0.78. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. XP's industry has an average PEG of 1.30 right now. Within the past year, XP's PEG has been as high as 1.03 and as low as 0.16, with a median of 0.68.
Another valuation metric that we should highlight is XP's P/B ratio of 2.7. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. This stock's P/B looks attractive against its industry's average P/B of 3.23. XP's P/B has been as high as 3.08 and as low as 1.60, with a median of 2.34, over the past year.
Finally, we should also recognize that XP has a P/CF ratio of 11.68. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 17.49. Within the past 12 months, XP's P/CF has been as high as 12.54 and as low as 6.71, with a median of 9.85.
Value investors will likely look at more than just these metrics, but the above data helps show that XP is likely undervalued currently. And when considering the strength of its earnings outlook, XP 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
XP Inc. (XP): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
Zacks Investment Research
