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.
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 a variety of methods, including tried-and-true valuation metrics, to find these stocks.
Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.
One company to watch right now is American Public Education (APEI). APEI is currently sporting a Zacks Rank #1 (Strong Buy), as well as a Value grade of A.
Another valuation metric that we should highlight is APEI's P/B ratio of 2.38. 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. This stock's P/B looks solid versus its industry's average P/B of 3.54. Over the past 12 months, APEI's P/B has been as high as 2.41 and as low as 0.96, with a median of 1.54.
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. APEI has a P/S ratio of 1.17. This compares to its industry's average P/S of 1.59.
Finally, our model also underscores that APEI has a P/CF ratio of 14.20. 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. APEI's P/CF compares to its industry's average P/CF of 29.44. Over the past year, APEI's P/CF has been as high as 14.36 and as low as 2.43, with a median of 10.79.
Value investors will likely look at more than just these metrics, but the above data helps show that American Public Education is likely undervalued currently. And when considering the strength of its earnings outlook, APEI sticks out as one of the market's strongest value stocks.
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American Public Education, Inc. (APEI): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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