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 rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
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 stock to keep an eye on is Invesco Mortgage Capital (IVR). IVR is currently sporting a Zacks Rank #2 (Buy) and an A for Value. The stock has a Forward P/E ratio of 3.7. This compares to its industry's average Forward P/E of 7.95. IVR's Forward P/E has been as high as 4.12 and as low as 2.63, with a median of 3.41, all within the past year.
We should also highlight that IVR has a P/B ratio of 0.9. 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 company's current P/B looks solid when compared to its industry's average P/B of 0.94. Over the past year, IVR's P/B has been as high as 0.99 and as low as 0.70, with a median of 0.88.
Value investors also use the P/S ratio. The P/S ratio is calculated as price divided by sales. This is a preferred metric because revenue can't really be manipulated, so sales are often a truer performance indicator. IVR has a P/S ratio of 1.88. This compares to its industry's average P/S of 2.07.
Finally, our model also underscores that IVR has a P/CF ratio of 15.61. 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 stock's P/CF looks attractive against its industry's average P/CF of 17.51. Over the past 52 weeks, IVR's P/CF has been as high as 17.16 and as low as -8.89, with a median of 11.14.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Invesco Mortgage Capital is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, IVR feels like a great value stock at the moment.
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INVESCO MORTGAGE CAPITAL INC (IVR): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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