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.
Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of 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.
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 company value investors might notice is Invesco Mortgage Capital (IVR). IVR is currently holding a Zacks Rank #2 (Buy) and a Value grade of A. The stock has a Forward P/E ratio of 3.7. This compares to its industry's average Forward P/E of 8.08. Over the past 52 weeks, IVR's Forward P/E has been as high as 4.12 and as low as 2.63, with a median of 3.41.
We should also highlight that IVR has a P/B ratio of 0.9. 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. IVR's current P/B looks attractive when compared to its industry's average P/B of 0.98. Over the past year, IVR's P/B has been as high as 0.99 and as low as 0.70, with a median of 0.88.
Value investors also use the P/S ratio. The P/S ratio is calculated as price divided by 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. IVR has a P/S ratio of 2.08. This compares to its industry's average P/S of 2.09.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Invesco Mortgage Capital is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, IVR feels like a great value stock at the moment.
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
INVESCO MORTGAGE CAPITAL INC (IVR): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
Zacks Investment Research
