While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.
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.
Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.
One company value investors might notice is Heritage Insurance (HRTG). HRTG is currently sporting a Zacks Rank #1 (Strong 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. HRTG has a P/S ratio of 1.03. This compares to its industry's average P/S of 1.26.
Finally, investors will want to recognize that HRTG has a P/CF ratio of 7.53. 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. HRTG's P/CF compares to its industry's average P/CF of 12.34. Over the past 52 weeks, HRTG's P/CF has been as high as 9.22 and as low as 3.66, with a median of 5.56.
Value investors will likely look at more than just these metrics, but the above data helps show that Heritage Insurance is likely undervalued currently. And when considering the strength of its earnings outlook, HRTG sticks out as one of the market's strongest value stocks.
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Heritage Insurance Holdings, Inc. (HRTG): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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