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.
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 value investors might notice is Green Brick Partners (GRBK). GRBK is currently sporting a Zacks Rank of #2 (Buy) and an A for Value.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. GRBK has a P/S ratio of 1.2. This compares to its industry's average P/S of 1.85.
Finally, we should also recognize that GRBK has a P/CF ratio of 6.43. 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 22.75. GRBK's P/CF has been as high as 11.10 and as low as 6.17, with a median of 8.29, all within the past year.
These are only a few of the key metrics included in Green Brick Partners's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, GRBK looks like an impressive value stock at the moment.
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Green Brick Partners, Inc. (GRBK): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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