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 use a variety of methods, including tried-and-true valuation metrics, to find these stocks.
In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.
One company value investors might notice is Southwest Airlines (LUV). LUV is currently holding a Zacks Rank #1 (Strong Buy) and a Value grade of A.
LUV is also sporting a PEG ratio of 0.40. 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. LUV's PEG compares to its industry's average PEG of 0.45. Over the last 12 months, LUV's PEG has been as high as 6.49 and as low as 0.39, with a median of 2.95.
Another notable valuation metric for LUV is its P/B ratio of 2.13. 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 3.17. Over the past year, LUV's P/B has been as high as 2.47 and as low as 1.46, with a median of 1.90.
These are only a few of the key metrics included in Southwest Airlines'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, LUV looks like an impressive value stock at the moment.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Southwest Airlines Co. (LUV): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
Zacks Investment Research
