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.
Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. 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 stock to keep an eye on is Ooma (OOMA). OOMA is currently holding a Zacks Rank #2 (Buy) and a Value grade of A. The stock is trading with a P/E ratio of 14.07, which compares to its industry's average of 36.70. Over the last 12 months, OOMA's Forward P/E has been as high as 24.70 and as low as 12.66, with a median of 17.52.
We should also highlight that OOMA has a P/B ratio of 4.01. The P/B ratio pits a stock's market value against 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 7.03. Within the past 52 weeks, OOMA's P/B has been as high as 5.19 and as low as 3.44, with a median of 4.09.
Value investors also use the P/S ratio. The P/S ratio is calculated as price divided by 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. OOMA has a P/S ratio of 1.25. This compares to its industry's average P/S of 1.61.
Finally, investors should note that OOMA has a P/CF ratio of 31.37. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. OOMA's current P/CF looks attractive when compared to its industry's average P/CF of 32.95. Over the past 52 weeks, OOMA's P/CF has been as high as 76.49 and as low as 26.91, with a median of 46.92.
These are just a handful of the figures considered in Ooma's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that OOMA is an impressive value stock right now.
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Ooma, Inc. (OOMA): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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