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, 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 company to watch right now is Target (TGT). TGT is currently sporting a Zacks Rank #2 (Buy), as well as a Value grade of A. The stock is trading with P/E ratio of 11.14 right now. For comparison, its industry sports an average P/E of 33.36. Over the last 12 months, TGT's Forward P/E has been as high as 15.66 and as low as 9.53, with a median of 13.28.
We also note that TGT holds a PEG ratio of 2.41. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. TGT's PEG compares to its industry's average PEG of 3.92. TGT's PEG has been as high as 2.96 and as low as 1.45, with a median of 2.01, all within the past year.
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. TGT has a P/S ratio of 0.5. This compares to its industry's average P/S of 1.44.
These are just a handful of the figures considered in Target'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 TGT is an impressive value stock right now.
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Target Corporation (TGT): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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