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 tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.
One company to watch right now is Deluxe (DLX). DLX is currently sporting a Zacks Rank #1 (Strong Buy) and an A for Value. The stock is trading with P/E ratio of 5.32 right now. For comparison, its industry sports an average P/E of 7.33. DLX's Forward P/E has been as high as 6.95 and as low as 3.90, with a median of 5.28, all within the past year.
Investors will also notice that DLX has a PEG ratio of 0.44. 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. DLX's PEG compares to its industry's average PEG of 0.46. DLX's PEG has been as high as 0.58 and as low as 0.32, with a median of 0.44, all within the past year.
We should also highlight that DLX has a P/B ratio of 1.36. 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 1.60. Over the past 12 months, DLX's P/B has been as high as 1.75 and as low as 0.98, with a median of 1.34.
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. DLX has a P/S ratio of 0.56. This compares to its industry's average P/S of 0.72.
Finally, investors will want to recognize that DLX has a P/CF ratio of 3.37. 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. DLX's P/CF compares to its industry's average P/CF of 5.10. Within the past 12 months, DLX's P/CF has been as high as 3.89 and as low as 2.31, with a median of 2.97.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Deluxe is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, DLX feels like a great value stock at the moment.
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Deluxe Corporation (DLX): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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