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, value investing is easily one of the most popular ways to find great stocks in any market environment. 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.
One stock to keep an eye on is PG&E (PCG). PCG is currently sporting a Zacks Rank #2 (Buy), as well as a Value grade of A. The stock is trading with a P/E ratio of 9.36, which compares to its industry's average of 15.28. Over the last 12 months, PCG's Forward P/E has been as high as 14.79 and as low as 8.28, with a median of 10.97.
We also note that PCG holds a PEG ratio of 1.05. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. PCG's PEG compares to its industry's average PEG of 1.28. Over the past 52 weeks, PCG's PEG has been as high as 1.54 and as low as 0.88, with a median of 1.13.
Investors should also recognize that PCG has a P/B ratio of 1.34. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. PCG's current P/B looks attractive when compared to its industry's average P/B of 2.52. PCG's P/B has been as high as 2.09 and as low as 1.16, with a median of 1.54, over the past year.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. PCG has a P/S ratio of 1.4. This compares to its industry's average P/S of 2.31.
Finally, we should also recognize that PCG has a P/CF ratio of 4.89. 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 12.38. PCG's P/CF has been as high as 6.87 and as low as 4.26, with a median of 5.49, all within the past year.
Value investors will likely look at more than just these metrics, but the above data helps show that PG&E is likely undervalued currently. And when considering the strength of its earnings outlook, PCG sticks out as one of the market's strongest value stocks.
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Pacific Gas & Electric Co. (PCG): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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