The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.
Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
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 Nordstrom (JWN). JWN is currently sporting a Zacks Rank of #1 (Strong Buy) and an A for Value. The stock has a Forward P/E ratio of 10.83. This compares to its industry's average Forward P/E of 13.63. Over the past 52 weeks, JWN's Forward P/E has been as high as 13.36 and as low as 10.40, with a median of 11.98.
Another valuation metric that we should highlight is JWN's P/B ratio of 3.45. 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 company's current P/B looks solid when compared to its industry's average P/B of 4.71. Over the past 12 months, JWN's P/B has been as high as 4.65 and as low as 3.35, with a median of 3.88.
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 popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. JWN has a P/S ratio of 0.27. This compares to its industry's average P/S of 0.36.
Finally, investors should note that JWN has a P/CF ratio of 3.59. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 10.90. Within the past 12 months, JWN's P/CF has been as high as 3.69 and as low as 2.76, with a median of 3.34.
These are only a few of the key metrics included in Nordstrom'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, JWN looks like an impressive value stock at the moment.
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Nordstrom, Inc. (JWN): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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