The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find 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 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.
Five9 (FIVN) is a stock many investors are watching right now. FIVN is currently sporting a Zacks Rank #2 (Buy), as well as a Value grade of A.
Investors will also notice that FIVN has a PEG ratio of 0.65. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. FIVN's industry has an average PEG of 1.32 right now. Within the past year, FIVN's PEG has been as high as 1.10 and as low as 0.47, with a median of 0.66.
Another notable valuation metric for FIVN is its P/B ratio of 2.85. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. FIVN's current P/B looks attractive when compared to its industry's average P/B of 5.84. Over the past 12 months, FIVN's P/B has been as high as 5.74 and as low as 2.47, with a median of 3.59.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a preferred metric because revenue can't really be manipulated, so sales are often a truer performance indicator. FIVN has a P/S ratio of 1.38. This compares to its industry's average P/S of 3.79.
Finally, investors should note that FIVN has a P/CF ratio of 12.96. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 17.89. Over the past year, FIVN's P/CF has been as high as 40.41 and as low as 11.77, with a median of 19.85.
Value investors will likely look at more than just these metrics, but the above data helps show that Five9 is likely undervalued currently. And when considering the strength of its earnings outlook, FIVN sticks out as one of the market's strongest value stocks.
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
Five9, Inc. (FIVN): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
Zacks Investment Research
