The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find 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 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 stock to keep an eye on is FedEx (FDX). FDX is currently holding a Zacks Rank #2 (Buy) and a Value grade of A. The stock is trading with a P/E ratio of 12.21, which compares to its industry's average of 14.95. Over the past year, FDX's Forward P/E has been as high as 14.59 and as low as 9.89, with a median of 12.22.
Investors should also note that FDX holds a PEG ratio of 1.26. 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. FDX's PEG compares to its industry's average PEG of 1.98. Over the past 52 weeks, FDX's PEG has been as high as 1.26 and as low as 0.83, with a median of 1.05.
Another valuation metric that we should highlight is FDX's P/B ratio of 1.97. 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. FDX's current P/B looks attractive when compared to its industry's average P/B of 5.48. Within the past 52 weeks, FDX's P/B has been as high as 2.74 and as low as 1.78, with a median of 2.19.
Finally, our model also underscores that FDX has a P/CF ratio of 6.55. 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 11.34. Over the past year, FDX's P/CF has been as high as 8.87 and as low as 5.72, with a median of 7.03.
These figures are just a handful of the metrics value investors tend to look at, but they help show that FedEx is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, FDX feels like a great value stock at the moment.
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FedEx Corporation (FDX): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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