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 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 Healthcare Services Group (HCSG). HCSG is currently sporting a Zacks Rank #2 (Buy), as well as an A grade for Value. The stock is trading with P/E ratio of 17.15 right now. For comparison, its industry sports an average P/E of 18.17. HCSG's Forward P/E has been as high as 19.66 and as low as 11.54, with a median of 14.77, all within the past year.
Another notable valuation metric for HCSG is its P/B ratio of 2.4. The P/B ratio is used to compare a stock's market value with 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 2.73. Over the past year, HCSG's P/B has been as high as 2.51 and as low as 1.33, with a median of 1.77.
Value investors also use the P/S ratio. The P/S ratio is calculated as price divided by 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. HCSG has a P/S ratio of 0.67. This compares to its industry's average P/S of 0.79.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Healthcare Services Group is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, HCSG feels like a great value stock at the moment.
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
Healthcare Services Group, Inc. (HCSG): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
Zacks Investment Research
