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, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. 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 Sally Beauty (SBH). SBH is currently holding a Zacks Rank #2 (Buy) and a Value grade of A. The stock is trading with P/E ratio of 7.76 right now. For comparison, its industry sports an average P/E of 18.68. Over the last 12 months, SBH's Forward P/E has been as high as 8.12 and as low as 4.04, with a median of 5.53.
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. SBH has a P/S ratio of 0.41. This compares to its industry's average P/S of 0.62.
These are just a handful of the figures considered in Sally Beauty'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 SBH is an impressive value stock right now.
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Sally Beauty Holdings, Inc. (SBH): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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