Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore 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 tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
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 to watch right now is Simply Good Foods (SMPL). SMPL is currently holding a Zacks Rank #1 (Strong Buy) and a Value grade of A. The stock holds a P/E ratio of 12.75, while its industry has an average P/E of 22.53. SMPL's Forward P/E has been as high as 20.55 and as low as 12.63, with a median of 17.34, all within the past year.
SMPL is also sporting a PEG ratio of 2.26. 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. SMPL's PEG compares to its industry's average PEG of 5.35. Over the past 52 weeks, SMPL's PEG has been as high as 3.21 and as low as 2.04, with a median of 2.64.
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 popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. SMPL has a P/S ratio of 1.35. This compares to its industry's average P/S of 3.46.
Finally, investors will want to recognize that SMPL has a P/CF ratio of 15.31. 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 company's current P/CF looks solid when compared to its industry's average P/CF of 17.39. Within the past 12 months, SMPL's P/CF has been as high as 23.95 and as low as 15.19, with a median of 20.34.
These are only a few of the key metrics included in Simply Good Foods's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, SMPL looks like an impressive value stock at the moment.
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The Simply Good Foods Company (SMPL): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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