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.
Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. 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 value investors might notice is Avnet (AVT). AVT is currently sporting a Zacks Rank #2 (Buy), as well as an A grade for Value. The stock is trading with P/E ratio of 10.47 right now. For comparison, its industry sports an average P/E of 14.06. Over the past 52 weeks, AVT's Forward P/E has been as high as 16.75 and as low as 8.05, with a median of 10.50.
We also note that AVT holds a PEG ratio of 0.36. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. AVT's PEG compares to its industry's average PEG of 0.73. AVT's PEG has been as high as 1.89 and as low as 0.35, with a median of 0.81, all within the past year.
Another valuation metric that we should highlight is AVT's P/B ratio of 0.89. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. This company's current P/B looks solid when compared to its industry's average P/B of 1.64. Within the past 52 weeks, AVT's P/B has been as high as 1.00 and as low as 0.71, with a median of 0.91.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a preferred metric because revenue can't really be manipulated, so sales are often a truer performance indicator. AVT has a P/S ratio of 0.22. This compares to its industry's average P/S of 0.42.
Finally, our model also underscores that AVT has a P/CF ratio of 12.36. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 15.71. Over the past year, AVT's P/CF has been as high as 13.11 and as low as 7.28, with a median of 9.98.
These are only a few of the key metrics included in Avnet'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, AVT looks like an impressive value stock at the moment.
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Avnet, Inc. (AVT): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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