While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.
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 a variety of methods, including tried-and-true valuation metrics, to find these stocks.
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.
Rio Tinto (RIO) is a stock many investors are watching right now. RIO is currently holding a Zacks Rank #2 (Buy) and a Value grade of A. The stock has a Forward P/E ratio of 9.99. This compares to its industry's average Forward P/E of 16.43. Over the last 12 months, RIO's Forward P/E has been as high as 10.78 and as low as 8.49, with a median of 9.64.
We also note that RIO holds a PEG ratio of 0.37. 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. RIO's industry has an average PEG of 0.94 right now. Within the past year, RIO's PEG has been as high as 0.43 and as low as 0.35, with a median of 0.39.
These are just a handful of the figures considered in Rio Tinto'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 RIO is an impressive value stock right now.
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Rio Tinto PLC (RIO): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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