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 tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
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 to watch right now is Encore Capital Group (ECPG). ECPG is currently holding a Zacks Rank #1 (Strong Buy) and a Value grade of A. The stock has a Forward P/E ratio of 5.46. This compares to its industry's average Forward P/E of 9.19. Over the past year, ECPG's Forward P/E has been as high as 9.37 and as low as 4.14, with a median of 5.49.
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 preferred metric because revenue can't really be manipulated, so sales are often a truer performance indicator. ECPG has a P/S ratio of 0.74. This compares to its industry's average P/S of 1.37.
Finally, our model also underscores that ECPG has a P/CF ratio of 17.23. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 27.31. ECPG's P/CF has been as high as 99.38 and as low as 10.25, with a median of 17.11, all within the past year.
These are just a handful of the figures considered in Encore Capital Group'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 ECPG is an impressive value stock right now.
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Encore Capital Group Inc (ECPG): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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