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.
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 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 company to watch right now is TripAdvisor (TRIP). TRIP is currently sporting a Zacks Rank #2 (Buy), as well as an A grade for Value. The stock is trading with a P/E ratio of 11.2, which compares to its industry's average of 25.48. Over the past year, TRIP's Forward P/E has been as high as 13.51 and as low as 7.08, with a median of 10.62.
Investors should also note that TRIP holds a PEG ratio of 1.02. 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. TRIP's industry currently sports an average PEG of 1.55. Within the past year, TRIP's PEG has been as high as 3.38 and as low as 0.57, with a median of 2.04.
We should also highlight that TRIP has a P/B ratio of 3.49. 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 attractive against its industry's average P/B of 4.78. Over the past 12 months, TRIP's P/B has been as high as 3.54 and as low as 1.91, with a median of 2.60.
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. TRIP has a P/S ratio of 0.8. This compares to its industry's average P/S of 1.3.
These figures are just a handful of the metrics value investors tend to look at, but they help show that TripAdvisor is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, TRIP feels like a great value stock at the moment.
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TripAdvisor, Inc. (TRIP): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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