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 fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
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 value investors might notice is Ericsson (ERIC). ERIC is currently sporting a Zacks Rank #2 (Buy) and an A for Value. The stock is trading with a P/E ratio of 14.34, which compares to its industry's average of 25.96. ERIC's Forward P/E has been as high as 18.61 and as low as 12.48, with a median of 15.38, all within the past year.
We should also highlight that ERIC has a P/B ratio of 3.05. 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 company's current P/B looks solid when compared to its industry's average P/B of 5.15. Over the past 12 months, ERIC's P/B has been as high as 3.73 and as low as 2.72, with a median of 3.22.
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. ERIC has a P/S ratio of 1.36. This compares to its industry's average P/S of 1.91.
Finally, we should also recognize that ERIC has a P/CF ratio of 22.19. 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. ERIC's current P/CF looks attractive when compared to its industry's average P/CF of 49.05. Within the past 12 months, ERIC's P/CF has been as high as 30.43 and as low as -47.05, with a median of 22.19.
These are just a handful of the figures considered in Ericsson's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that ERIC is an impressive value stock right now.
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Ericsson (ERIC): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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