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, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
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.
One stock to keep an eye on is AZZ (AZZ). AZZ is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock has a Forward P/E ratio of 13.17. This compares to its industry's average Forward P/E of 18.67. Over the last 12 months, AZZ's Forward P/E has been as high as 17.81 and as low as 12.87, with a median of 15.09.
We also note that AZZ holds a PEG ratio of 0.94. 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. AZZ's PEG compares to its industry's average PEG of 1.84. AZZ's PEG has been as high as 1.27 and as low as 0.92, with a median of 1.08, all within the past year.
We should also highlight that AZZ has a P/B ratio of 2.25. 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 4.34. Over the past 12 months, AZZ's P/B has been as high as 3.69 and as low as 2.19, with a median of 2.61.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by 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. AZZ has a P/S ratio of 1.52. This compares to its industry's average P/S of 2.11.
Finally, we should also recognize that AZZ has a P/CF ratio of 10.72. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. AZZ's current P/CF looks attractive when compared to its industry's average P/CF of 35.80. AZZ's P/CF has been as high as 13.67 and as low as 9.38, with a median of 11.28, all within the past year.
Value investors will likely look at more than just these metrics, but the above data helps show that AZZ is likely undervalued currently. And when considering the strength of its earnings outlook, AZZ sticks out at as one of the market's strongest value stocks.
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AZZ Inc. (AZZ): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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